Philippine stocks declined Wednesday as investors turned cautious ahead of the release of US inflation report which will be a key indicator for possible US Federal Reserve policy decision.
The 30-company Philippine Stock Exchange index plunged 82.11 points, or 1.22 percent, to close at 6,642.71, while the broader all-shares index declined by 27.25 points, or 0.72 percent, to settle at 3,758.55.
The peso also retreated to 58.28 against the US dollar Wednesday from 58.01 Tuesday.
“Local shares fell back below the 6,700 level once more as traders evaluated the year-end rally and awaited Wednesday’s consumer price index report, expected to show a 0.3 percent monthly and 2.7 percent annual rise. The data could influence the Fed’s Dec. 17 to 18 policy decisions,” Regina Capital Development Corp. head of sales Luis Limlingan said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said stocks also ended lower after the World Bank reduced its Philippine gross domestic product (GDP) growth outlook to 5.9 percent from 6 percent on possible trade disruption and geopolitical conflict risks next year.
Among the sectors, only the financial index ended in the green, rising by 0.21 percent.
Services declined by 2.37 percent, followed by property by 1.45 percent, holding firms by 1.42 percent and mining and oil by 0.58 percent.
Value of trading was moderate at P4.7 billion. Foreign investors were net sellers, with net outflows reaching P497.83 million.
Century Pacific Food Inc. led index members, rising 2.02 percent to P42.85, while Wilcon Depot Inc. was the worst index performer, declining by 4.96 percent to P13.02.
Meanwhile, Asian markets diverged on Wednesday ahead of US inflation data that could play a key role in the Federal Reserve’s interest rate decision next week, while traders were also keeping tabs on Beijing, hoping for more economic support measures.
Seoul extended Tuesday’s rebound rally, though political uncertainty after South Korean President Yoon Suk Yeol’s brief imposition of martial law kept the won under pressure around two-year lows against the dollar.
Investors were taking a breather after a run of volatility in recent weeks fueled by a range of issues including Donald Trump’s re-election, the crisis in South Korea, upheaval in the Middle East and ongoing worries about China’s economy.
All three main Wall Street indexes ended in the red Tuesday, with analysts pointing to profit-taking from a string of records, with the focus now on the consumer price index release due later in the day.
While the reading is expected to show a slight pick-up, there is still a strong expectation the US central bank will cut rates for a third straight meeting next week.
“The holiday season is in full swing, and like countless children around the world wishing for something special from jolly old Saint Nick, equity markets are hoping the US Federal Reserve will bring them a comfy-cosy interest rate cut,” said Saira Malik, chief investment officer at asset manager Nuveen.
However, there is speculation that monetary policymakers will not make as many reductions next year as previously expected amid fears that Trump’s planned tax cuts, deregulation and tariff hikes will reignite inflation.
Beijing’s attempts to kickstart growth are also in view, with leaders expected to gather Wednesday for a two-day Central Economic Work Conference aimed at hammering out the agenda for next year. With AFP
President Xi Jinping and other top leaders announced on Monday their first major shift in policy for more than a decade, saying they would “implement a more active fiscal policy and an appropriately relaxed” strategy.
The remarks represented a move away from their previous “prudent” approach, sparking hopes for more rate cuts and the freeing up of more cash for lending.
The announcement comes as officials prepare for a second term for Trump, who has indicated he will reignite his hardball trade policies, fueling fears of another standoff between the superpowers.
Shares in Shanghai rose but Hong Kong gave up an early rally to end in the red.
There were gains in Wellington, Mumbai and Jakarta, but Sydney, Singapore, Bangkok, Taipei and Manila fell. Tokyo was flat.
Seoul rose one percent to build on Tuesday’s advance of more than two percent, which came after tumbling in the wake of Yoon’s December 3 martial law bid.
London, Paris and Frankfurt all opened lower.
Traders are now tracking developments as Yoon faces a second impeachment vote on Saturday.
On currency markets, the euro dropped ahead of the European Central Bank’s monetary policy meeting on Thursday, when it is expected to cut rates as it seeks to boost the struggling eurozone growth.
Investors are also eyeing Paris, where French officials said President Emmanuel Macron aims to name a new prime minister “within 48 hours” as he seeks to end political deadlock following the ouster of Michel Barnier. With AFP
