Market ends nearly flat; Jollibee and PLDT drop

The stock market closed nearly flat Wednesday following a tepid lead from Wall Street, where another forecast-busting inflation reading spooked investors just as the Federal Reserve kicked off its latest policy meeting.

The Philippine Stock Exchange Index slipped 3.38 points, or 0.05 percent, to 6,973.35 on a value turnover of P10.7 billion. Gainers, however, edged losers, 111 to 96, with 53 issues unchanged.

Jollibee Foods Corp., the biggest fast-food chain, dropped 3.8 percent to P206.80, while PLDT Inc., the largest telecommunications firm, declined 2.1 percent to P1,281.

Universal Robina Corp., the biggest snack food maker, fell 2.2 percent to P145.10, but BDO Unibank Inc. of the Sy Group, the largest lender in terms of assets, rose 4.6 percent to P117.90.

Meanwhile, markets mostly fell in Asia on Wednesday. Traders have been keeping their powder dry ahead of the closely watched gathering of US central bank officials, who are discussing plans for their ultra-loose measures in the face of a blistering economic recovery from last year’s coronavirus-induced collapse.

Tokyo, Hong Kong, Shanghai, Singapore, Wellington, Mumbai and Taipei all fell though Sydney, Seoul, Bangkok and Jakarta rose.

Fed largesse and colossal government spending have been key to spurring the rebound and a more than one-year equities rally, with the rollout of vaccines and easing of containment measures providing extra fuel.

But there is a fear that the support—including vast Fed bond-buying and record low interest rates—will prove to be a double-edged sword as prices soar and the economy overheats, leading to a sharp hike in borrowing costs.

Bank officials have consistently sought to assure markets that the expected surge in inflation will be temporary and monetary policy will be kept accommodative for as long as the economy needs it.

However, traders remain skeptical, especially after the latest batch of US data, which showed the producer price index hit 6.6 percent in May, above forecasts and the highest since current records began in 2010, fueling concerns the rises could filter through to shops. Retail sales fell more than estimated, pointing to a bumpy recovery.

Tuesday’s reading came days after the consumer price index came in at a 13-year high.

In the latest sign that the issue is causing a headache around the world, British data Wednesday showed inflation there came in far higher than expected and at the strongest level in two years. The news sent the pound up against the dollar and euro.

While the general outlook for equities remains positive, there is a continuing worry that the Fed’s first interest rate rise could come earlier than initially thought.

And the conclusion later in the day of the bank’s meeting will be pored over for any clues about its plans, including a possible indication of when it will begin tapering its bond-buying.

“The outlook looks pretty positive but a lot of investors are asking for there to be better clarity on when we are going to have some start to the taper,” Julie Biel, at Kayne Anderson Rudnick, told Bloomberg TV. With AFP