Stock market closes flat; Globe, PLDT extend rally

The stock market ended flat Thursday, with bouts of profit taking on select issues capping the early gains of the benchmark index.

The Philippine Stock Exchange Index slipped 1.62 points, or 0.02 percent, to 6,820.53 on a value turnover of P9 billion. Losers edged gainers, 102 to 94, with 53 issues unchanged.

JG Summit Holdings Inc. of the Gokongwei Group fell 4 percent to P64.95, while SM Investments Corp. of the Sy Group dropped 2.8 percent to P982.

Globe Telecom Inc., the second-biggest mobile phone company, however, advanced 13.4 percent to P2,948, while PLDT Inc., the leading telecommunications firm, climbed 7.7 percent to P1,449.

Asian markets mostly fell Thursday as hopes for the global recovery and signs of a possible slowdown in new virus infections play off against China’s regulatory clampdown and the prospect of an end to Federal Reserve largesse.

Equities and oil have by and large enjoyed a positive week, helped by full US approval of Pfizer-BioNTech’s vaccine and speculation the Fed will take its time in removing its ultra-loose monetary policy whenever it begins to do so.

However, while Wall Street continued to chalk up new records, Asian investors shifted a little more cautiously as they assessed the outlook.

Asian investors struggled to maintain Wall Street’s rally.

Hong Kong and Shanghai each fell more than one percent as tech firms were dragged down by weak earnings results that came as China embarked on its crackdown on the industry, while Sydney, Wellington, Bangkok and Jakarta also declined. However, Tokyo, Singapore, Taipei and Mumbai eked out gains.

Seoul was also in the red after South Korea became one of the first major economies to start lifting interest rates since they were cut to record lows last year to battle the coronavirus impact.

Top of the agenda this week is Fed boss Jerome Powell’s speech Friday to the Jackson Hole symposium of central bankers and economists, which will be closely followed for any indication about its policy plans in light of rising inflation and the economic rebound.

The bank is widely expected to begin easing back on its vast bond-buying program by the end of the year, though the spread of the Delta variant and its impact on growth has some observers and even hawkish Fed members rethinking the wisdom of doing so.

Analysts said the speed and timing of a pullback could be crucial.

“When the Fed actually announces the taper, it will likely also give some degree of information on what pace it will take and how flexible or inflexible they want to be with the process,” Guneet Dhingra, at Morgan Stanley, said.

“That could provide a key signal for the rate-hike cycle—particularly with regard to the pace of the hikes.” With AFP

However, some warn that starting to taper too late could cause problems.

“It would be dangerous for the Fed to do this because it needs to be in a position—from the middle of next year—to start putting out the rhetoric that they may be raising rates,” said Steven Barrow of Standard Bank Group.

“And we know it’s not out of the realm of possibilities that the Fed could lift rates some time around the end of next year. So I’m focused more on the end point for Fed tapering than the starting point.” With AFP