Stocks fell for a third day, following the movement of Asian markets as a risk-off reaction to US President Donald Trump’s comments at a rally that he may end the North American Free-Trade Agreement.
The Philippine Stock Exchange index, the 30-company benchmark, shed 17 points, or 0.2 percent, to close at 7,998.75 Wednesday, the first time it fell below the 8,000-point mark in six days. Despite Wednesday’s loss, the bellwether was still up 16.9 percent since the start of the year.
The heavier index, representing all shares, ended flat at 4,736.44, on a value turnover of P5.7 billion. Gainers outnumbered losers, 99 to 88, while 59 issues were unchanged.
Six of the 20 most active stocks ended in the green, led by miner Nickel Asia Corp. which jumped 6.2 percent to P6.89 and cement manufacturer Cemex Holdings Philippines Inc. which climbed 4.7 percent to P5.99. Chemical producer D&L Industries Inc. advanced 4.3 percent to P10.60.
Meanwhile, Trump grabbed investors’ attention in an otherwise listless Asian trading session, with the yen rising and S&P 500 Index futures slipping with the Mexican peso as the US president said he may end Nafta.
Some of the earlier risk-on trade was unwound, with the dollar pausing after Trump also threatened to shut down the US government if he is unable to get funds to build a wall along the Mexican border. Asian stocks stalled, with benchmarks coming off their highs in Tokyo and declining in Sydney and Seoul. Hong Kong’s trading session was canceled for the day as a typhoon buffeted the city.
“The Nafta hot air may be as much an excuse to take a step back after Wall Street’s surge yesterday, as it is a legitimate concern about the president not appreciating nuances of inter-dependence embedded in trade deals,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “The ‘she loves me, she loves me not’ thought process could lead to on-off markets.”
The risk-off reaction to Trump’s comments at a rally of his supporters in Phoenix contrasted with Tuesday’s mood on Wall Street, when stocks jumped amid optimism the president’s administration is making progress on tax reform. European stock futures declined.
“It’s possible he’s trying to take a tougher stance externally to make up for recent confusion within the administration,” said Hideyuki Ishiguro, a senior strategist at Daiwa Securities Co. in Tokyo. “There’s still the possibility that Trump may suddenly start criticizing trade relationships with Japan and China. Investors are worried about those sorts of possibilities.”
There is little top-tier economic data out this week and volumes are being kept low by the Northern Hemisphere summer. The focus turns to the annual conference of global central bankers that kicks off in Jackson Hole, Wyoming, on Thursday with sentiment among investors that global policy makers seem reluctant to tighten liquidity.
Geopolitical events continue to hover in the background. Trump said during his speech that North Korean leader Kim Jong Un is beginning to respect the US, the latest comments that suggest his administration is moving closer to seeking talks over Pyongyang’s nuclear arsenal. The US tightened its financial restrictions on North Korea, slapping sanctions on Chinese and Russian entities it accused of assisting Pyongyang’s development of nuclear weapons and ballistic missiles. With Bloomberg, AFP