The Philippine Stock Exchange index (PSEi) closed lower Thursday as investor sentiment turned cautious over the latest tariff threats from US President Donald Trump.
The PSEi shed 53.25 points, or 0.87 percent, to end at 6,066.63, while the broader all-shares index also experienced a slight decline, losing 3.38 points, or 0.09 percent, to close at 3,671.62.
The peso, however, climbed to 57.94 against the US dollar Thursday from 58.08 Wednesday.
“Philippine shares fell below the 6,100 level once again as the market took cues from cautious Federal Reserve and US President Donald Trump’s threat of a 25 percent tariff on imported autos, semiconductors and pharmaceutical products which could take effect as early as April 2,” Regina Capital Development Corp. head of sales Luis Limlingan said.
Limlingan said the US Fed meeting’s minutes showed that officials would also like to see progression on inflation rate before proceeding with cutting interest rates.
Sectoral indices were predominantly in the red as only the financial index managed to close in the positive territory, rising 0.58 percent.
Property suffered the most loss, dropping 2.56 percent, followed by holding firms, declining 1.25 percent.
Market activity saw a total volume of 1.196 billion shares traded, amounting to P5.724 billion. The day’s transactions ended with 74 gainers, 113 losers and 58 issues unchanged.
The share price of Ayala Land Inc. declined 8.06 percent to P22.80, while Bank of the Philippine Islands climbed 1.72 percent to P129.80.
Asian equity markets turned negative Thursday and gold hit a record high amid Federal Reserve concerns that Trump’s tariffs and immigration measures could reignite inflation.
The losses come despite a second-straight record close on Wall Street and follow a recent rally as traders have rolled with the president’s latest tariff salvos, betting that they are being used as negotiating tactics.
Minutes from the US central bank’s January meeting suggested officials were not likely to cut interest rates any time soon — having reduced them at three successive meetings — citing worries about the impact of Trump’s policies.
Decision makers expected that “under appropriate monetary policy, inflation would continue to move toward (their target of) two percent, although progress could remain uneven”, the minutes said.
But without referring to Trump by name, the minutes said policymakers raised concerns that “the effects of potential changes in trade and immigration policy” could complicate the disinflation process.
The remarks come after a number of economists warned that the Republican’s pledge to ramp up tariffs on trade partners while slashing taxes, regulations and immigration could fan inflation.
Traders see a roughly 80 percent likelihood the Fed will make no more than two quarter-point cuts this year, according to CME Group.
The minutes also revealed that officials were mindful that the debt ceiling needed to be lifted to prevent the country from defaulting on its obligations, which could deal a hefty blow to the global economy.
The government hit its limit in January but the Treasury has managed to keep things ticking over by using so-called extraordinary measures.
“The overall tone of the meeting minutes was unsurprising, considering that Fed chair Jerome Powell had said on no less than five separate occasions during the January press conference that the committee did not need to be ‘in a hurry’ to make further adjustments to policy rates,” said Ryan Wang, US economist at HSBC.
– Strong yen –
While all three main indexes in New York rose, with the S&P 500 at another all-time peak, Asia stumbled.
Hong Kong, which has climbed around 15 percent so far this year, dropped more than one percent as the China tech surge came to an end.
Tokyo was weighed down by a stronger yen, which briefly broke below 150 per dollar as the Bank of Japan eyes more interest rate hikes, while Sydney, Seoul, Wellington, Taipei, Mumbai, Bangkok, Singapore and Manila also retreated.
Shanghai was given a fillip and pared early losses to end flat after Trump suggested on Wednesday that a trade deal with China was “possible”.
He also told journalists aboard Air Force One on Wednesday that he was considering lumber tariffs of “maybe 25 percent” in the coming months.
London opened lower, although Paris and Frankfurt rose.
And gold hit a record above $2,954 as investors rushed into the safe-haven commodity, which is sought out in times of uncertainty and as central banks stock up.
Dealers are keeping a nervous eye on developments in Europe after Brussels and Kyiv were excluded from the first high-level talks between the United States and Russia since the start of the war in Ukraine.
Trump also raised eyebrows by calling Ukrainian leader Volodymyr Zelensky a “dictator” on Wednesday, widening a personal rift with major implications for efforts to end the conflict triggered by Russia’s invasion three years ago.
The United States has provided essential funding and arms to Ukraine but Trump made an abrupt policy shift by opening talks with Moscow just weeks after he returned to the White House.
“A Dictator without Elections, Zelenskyy better move fast or he is not going to have a Country left,” Trump wrote on his Truth Social platform.
Zelensky was elected in 2019 for a five-year term and has remained leader under martial law imposed as his country fights for its survival. With AFP