The stock market declined in thin trading Monday, with virus spiking in parts of Asia keeping investors on their toes.
The Philippine Stock Exchange Index fell 34.36 points, or 0.6 percent, to 6,164.89 on a value turnover of P4.5 billion. Losers beat gainers, 127 to 79, with 40 issues unchanged.
Megaworld, Corp., the biggest lessor of office spaces, slumped 5.6 percent to P2.70, while DITO CME Holdings Corp., the third major mobile phone company, also dropped 5.6 percent to P8.70.
Aboitiz Power Corp. of the Aboitiz Group was down 3 percent to P21.40, while Converge ICT Solutions Inc., a fiber internet service provider, fell 2.4 percent to P19.90.
The rest of Asian equity markets were mixed Monday as inflation concerns played off against optimism over the global economic recovery.
Wall Street provided a tepid lead at the end of last week, though European equities were given a boost by upbeat eurozone economic data and progress in the bloc’s vaccination drive after a slow start.
Hong Kong, Seoul, Wellington, Bangkok, and Jakarta were all in negative territory but Tokyo, Shanghai, Sydney, Singapore, Taipei and Mumbai rose.
With expectations that the global recovery will pick up pace this year, the main focus is now on the impact that will have on prices, with observers warning a long period of high inflation will force central banks to wind back the ultra-loose monetary policies that have helped fire a long-running market rally.
Adding to the upward pressure on inflation is US President Joe Biden’s massive stimulus package passed earlier this year, while he also has others worth trillions more on infrastructure and help for families.
The Federal Reserve has repeatedly said it will not scale back on its largesse, which includes vast bond-buying and record low-interest rates, until unemployment is tamed and inflation is running hot consistently.
But investors continue to worry that it might be forced to act sooner than expected.
“It’s going to be a very mixed market over the next several months until we get more information on what’s really going to happen with inflation and how the stimulus in the US affects spending there, but also how the coronavirus really progresses,” JoAnne Feeney of Advisors Capital Management LLC told Bloomberg TV.
A healthy reading on activity in the services industries of the United States, Britain and the eurozone reinforced expectations of a strong rebound.
The reading “should keep inflation fears alive and plays into the view of central banks needing to normalize policy earlier than their official guidance suggests”, said National Australia Bank’s Tapas Strickland.
He pointed out that Philadelphia Fed President Patrick Harker—who has until recently said it was too early to tighten policy—was in support of having a discussion on tapering “sooner rather than later,” adding the turnaround appeared to come after the release of forecast-busting consumer and producer price figures. With AFP
