Market tumbles; Dito, GT Capital decline

The stock market slumped Wednesday on continued consolidation and concerns on rising virus infections in Europe and the US.

The Philippine Stock Exchange Index fell 86.33 points, or 1.2 percent, to 7,047.85 on a value turnover of P11.9 billion. Losers overwhelmed gainers, 146 to 74, with 45 issues unchanged.

Dito CME Holdings Corp., the third major mobile phone firm, dropped 8.5 percent P12.26, while AC Energy Philippines Inc., a unit of conglomerate Ayala Corp., shed 6 percent to P9.

GT Capital Holdings Inc. of the Ty Group declined 6.1 percent to P526, while unit Metropolitan Bank & Trust Co., the second-biggest lender in terms of assets, fell 4.4 percent to P44.50.

The rest of Asian markets struggled Wednesday after a strong start to the year, with the virus and vaccines taking a backseat briefly as focus turned to the US state of Georgia, where two senate runoff elections could decide the fate of Joe Biden’s legislative program.

Traders have for months been juggling long-term optimism and short-term worries with hopes that inoculations will mean life can slowly get back to normal.

A surge in COVID cases globally, however, has forced several nations to reimpose lockdowns and other strict containment measures.

Having navigated the major stumbling blocks of Brexit, US stimulus and the presidential elections, eyes are now on the closely fought vote in Georgia, with the Democrats taking one senate seat and the other too close to call.

Dealers worry that a double win for the Democrats”•which would see them wrest control of the Senate and give them control of Capitol Hill for at least the next two years”•would allow Biden to push through measures such as tax hikes and market regulations.

While it would likely pave the way for a new, huge stimulus, there is also fear that would lead to higher inflation and, in turn, higher interest rates.

“A dual win should lead to a steeper (Treasury yield) curve and a weaker dollar as the fiscal situation would be seen as unsustainable,” said Sebastien Galy, of Nordea Investment.

The dollar indeed weakened against most other currencies as Democrats looked to have their noses in front.

After a positive lead from Wall Street, where all three main indexes bounced back from their worst start to a year since 2016, Asian markets mostly drifted lower.

Hong Kong and Shanghai rose along with Bangkok, but Tokyo, Sydney, Seoul, Mumbai, Taipei, Wellington, and Jakarta all fell.

Analysts said that while new restrictions, worrying infection spikes, and stuttering vaccine distribution in some countries were jangling nerves on trading floors, dealers were keeping their sights on the second half of the year. 

“Even if the US has passed peak vaccine rollout, euphoria and dreams of the efficient distribution are now replaced with the unfortunate logistical rollout reality,” said Axi strategist Stephen Innes.

“Markets will remain focused on the end of the tunnel, regardless of  its length.”

Oil prices extended gains after soaring nearly five percent Tuesday on news that Saudi Arabia had offered to cut output by a million barrels in both February and March. The announcement sent WTI above $50 for the first time in 11 months. With AFP