Stocks rose Wednesday but gains were capped by concerns over a spike in COVID-19 cases and the reimposition of longer curfew hours in parts of Metro Manila.
The Philippine Stock Exchange added 41.49 points, or 0.6 percent, to 6,808.32 on a value turnover of P11.1 billion. Losers, however, beat gainers, 155 to 72, with 34 issues unchanged.
AC Energy Corp., a unit of conglomerate Ayala Corp., climbed 4.1 percent to P6.82, while PLDT Inc., the biggest telecommunications firm, advanced 2.5 percent to P1,328.
DITO CME Holdings Corp., the third major telecom company, however, sank 25 percent to P9, while MerryMart Consumer Corp., a super market chain owned by businessman Edgar Sia II, dropped 6.4 percent to P4.69.
The rest of Asian and European investors struggled to extend a global markets rally Wednesday on concerns over the prospect of soaring inflation and a hike in interest rates as the global economy explodes out of the coronavirus crisis.
With US President Joe Biden’s $1.9-trillion handout-rich stimulus on the cusp of being passed, focus on trading floors for weeks has been on the impact of an expected spending splurge by the government and pent-up Americans as they emerge from lockdowns with plenty of spare cash.
In reaction to that, benchmark 10-year Treasury yields have climbed in recent months to one-year highs as dealers sell up in expectation that higher inflation will eat into their returns.
This has fanned fears the Federal Reserve will have to begin winding back the ultra-loose monetary policies—including record low interest rates—that have been a key driver of the year-long equities rally.
Those worries were soothed Tuesday when a closely watched sale of new three-year US debt passed off without a hitch—helping push yields down—though focus is now on the auctions of 10- and 30-year Treasuries Wednesday and Thursday. Weak demand for seven-year notes last week sparked a sharp sell-off across world markets.
The news provided a much-needed boost to Wall Street, where the tech-rich Nasdaq soared 3.7 percent, while the Dow and S&P 500 were also well in positive territory.
But Asia fluctuated through the day Wednesday.
There were gains in Hong Kong, Wellington, Taipei, Mumbai, Bangkok, and Jakarta but Tokyo was barely moved, while Shanghai, Sydney, Singapore, and Seoul all fell.
Cathay Pacific dropped almost two percent in Hong Kong at one after the troubled carrier announced a record US$2.8 billion loss last year as it was sideswiped by the impact of coronavirus. It later pared the losses.
Tim Murray, a strategist at T Rowe Price, had a word of warning for investors.
“After remaining at low levels for several years, inflation expectations for the rest of 2021 have risen because of an anticipated release of pent-up consumer demand in the US and abroad,” he said in a note.
“While the anticipated inflation rate is relatively modest, it is notable because expected inflation levels have not been this high since June 2014. In our view, US investors should not continue to expect the abnormally low levels of inflation seen over the past decade.” With AFP
