The stock market retreated Thursday with investors taking a breather after the latest rally, as they tried to assess when the Federal Reserve will begin to wind down its vast monetary easing program.
The Philippine Stock Exchange Index shed 32.41 points, or 0.5 percent, to 6,886, or 0.5 percent, on a value turnover of just P1.4 billion. Losers edged gainers, 100 to 97, with 52 issues unchanged.
Major property developer Ayala Land Inc. fell 2.4 percent to P37, while GMA Network Inc., the biggest broadcasting firm, slipped 1.1 percent to P13.90.
Ayala unit Manila Water Co. Inc., however, advanced 3.3 percent to P18.20, while GT Capital Holdings Inc. of the Ty Group rose 2.3 percent to P626.
The rest of Asian markets were mixed Thursday. After a troubled start to the week, equities across much of the region have enjoyed healthy gains in the past two days as US central bank chiefs looked to temper fears that record-low interest rates and colossal bond-buying were in their final throes.
Traders have for months worried that the blistering global recovery will fan inflation and force officials to act.
And the Fed—which has consistently said recent inflation spikes were temporary and it will maintain its policy as long as the economy needs—last Wednesday suggested for the first time it could lift borrowing costs in 2023, a year earlier than initially targeted.
The past few days have seen a number of top officials try to tame expectations, which provided some solace, but traders remain nervous.
On Wall Street, the Dow and S&P 500 closed slightly lower, though the Nasdaq ended at another record high.
Asian investors jockeyed for position, with markets fluctuating through the day.
Hong Kong, Singapore, Seoul, Taipei and Mumbai all rose but Sydney, Bangkok and Jakarta fell. Tokyo, Shanghai and Wellington were flat.
On Wednesday, a couple of Fed officials made their case for possibly tapering the bond-buying scheme by the end of this year.
Dallas Fed chief Robert Kaplan saw rate hikes as early as next year owing to the strong economic recovery and a wind-down of bond-buying soon.
“As we make substantial further progress, which I think will happen sooner than people expect… I think we’d be far better off, from a risk-management point of view, beginning to adjust these purchases of Treasuries and mortgage-backed securities,” he told Bloomberg News.
Beginning the taper earlier would provide more flexibility on future rate increases, he said.
He forecast inflation to hit 3.4 percent this year and 2.4 percent next year. The Fed’s official target is two percent.
Meanwhile, Atlanta Fed boss Raphael Bostic suggested a slowdown in bond-buying in the next few months while he predicted a rate hike next year and two in 2023. With AFP
National Australia Bank’s Tapas Strickland said that while there appeared to be no major reaction to Bostic’s comments, his “move from dove to slightly hawkish should be noted and suggests a 2022 hike is a real possibility if the data makes a case for it.” With AFP
