Stocks slip; BDO, Security Bank up

The stock market fell slightly Tuesday in mixed trading, with gains in select blue chips capping the losses.

The Philippine Stock Exchange Index shed 49.65 points, or 0.8 percent,  to 6,297.78 on a value turnover of P7.3 billion. Gainers, however, edged losers, 103 to 98, with 45 issues unchanged.

Jollibee Foods Corp., the biggest fast-food chain, dropped 3.4 percent to P144, while SM Investments Corp. of the Sy Group declined 2.6 percent to P935.

Security Bank Corp., the sixth-largest lender in terms of assets, however, rose 3.8 percent to P108, while BDO Unibank Inc., the biggest bank, climbed 3.7 percent to P102.70.

The rest of Asian stocks rallied Tuesday after an early plunge as Donald Trump countered one of his top economics advisers who said the China-US trade deal was “over,” fanning fears of a renewed tariffs standoff between the superpowers.

Peter Navarro’s remarks sent shivers through markets, which had started on the front foot as investors cheered the continued reopening of economies despite signs of a second wave of infections in several countries.

Appearing on Fox News, Navarro hit out at China’s handling of the coronavirus outbreak and when asked whether the much-vaunted pact signed in January was over he replied: “It’s over. Yes.”

Markets across Asia immediately fell into negative territory. But soon after, Trump tweeted: “The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!”

Navarro also said his comments had been taken out of context.

Equities then rallied and by the end of the day Hong Kong was up more than one percent, Tokyo added 0.5 percent, while Sydney and Shanghai put on 0.2 percent.

Seoul jumped 0.2 percent despite signs of a second wave of coronavirus in South Korea, while Mumbai rose 0.7 percent and Singapore edged up 0.1 percent. Taipei and Bangkok were also up.

Jakarta and Wellington were in the red.

“Navarro’s fluffed interview answer served as a useful beta test for how relevant the US-China trade deal still is for markets, even among all the concerns over the coronavirus,” said Jasper Lawler at London Capital Group.

“The markets have continued to sing an optimistic tune despite souring relations between the US and China. This wobble… demonstrates that optimism rests on the idea that souring relations won’t threaten the phase one deal.”

The easing of lockdown measures combined with trillions of dollars in government and central bank support remain the key drivers of the seemingly unstoppable march higher for equities.

And a pick-up in new cases in all continents is still unable to knock traders off their stride, as they bet on a V-shaped economic recovery.

“When you have high levels of liquidity, when you have a recovering economy, low inflation, low-interest rates, you really have a strong foundation for equities to move higher,” Victoria Fernandez at Crossmark Global Investments, told Bloomberg TV.  

“But there are so many uncertainties still out there that we think there’s going to be some volatility before we get that upside trend on a continual basis.” With AFP