The stock market skidded Friday on profit taking, as investors assessed messages from Federal Reserve and European Central Bank meetings this week and concerns about the Republican tax overhaul package lingered.
The Philippine Stock Exchange Index dropped 124.02 points, or 1.5 percent, to 8,337.04 on a value turnover of P10.7 billion. Losers beat gainers, 123 to 81, with 38 issues unchanged.
SM Prime Holdings Inc. of retail tycoon Henry Sy declined 4.8 percent to P36, while Bank of the Philippine Islands, the third-biggest bank in terms of assets, fell 3.2 percent to P103.
Semirara Mining and Power Corp., the largest coal producer and a major power generator, slumped 5.1 percent to P35.10 after Congress approved a bill raising the tax on coal. Aboitiz Equity Ventures Inc., whose unit Aboitiz Power Corp. also operates coal-fired plants, tumbled 3.9 percent to P67.50
The rest of stocks in Asia declined and the dollar headed for its first weekly loss this month.
Hong Kong and Chinese equities paced a region-wide slide, while Tokyo shares were little changed, paring earlier declines. India’s equity benchmark had the biggest gain in the region and the rupee climbed after a crucial local election.
The greenback remained under pressure after Republican Senator Marco Rubio threatened to opposed the tax legislation unless Senate leaders agree to a larger child tax credit. The euro held onto a retreat after the ECB remained cautious about the prospects of reaching its inflation goals, even as it reiterated a pledge to keep stimulus in place.
Uncertainty surrounding the fate of US tax reform is threatening to sour what’s been a stellar run for equities in 2017, as money managers dial back their appetite to take risk amid signs that the eight-year stock rally may not be far from its end. Pacific Investment Management Co. sees the good times rolling on in 2018 as global economies grow in sync, but the bond giant warned investors to brace for a downturn.
ECB President Mario Draghi sounded cautious about the prospect of inflation picking up even as economic growth remains robust. Draghi stopped short of saying the ECB will meet its 2 percent inflation goal in 2020 as he unveiled updated economic projections that showed continued growth over the next three years. The Fed earlier this week raised rates and kept its projection for three hikes next year, while saying it’s closely monitoring inflation developments.
Nader Naeimi, head of dynamic markets at AMP Capital, said that inflation will eventually pick up with global growth, given that there are signs of wages growth in places like the US and Japan.
“2017 was the first year that we’ve had synchronized global growth and inflation is a lagging indicator and now with developed market unemployment rate at a 40-year low, it’s a matter of time,” Naeimi told Bloomberg Television. “Not only investors, but the central banks, will be surprised that inflation will appear sooner than expected. It would be quite complacent to give up on the idea that with growth there will be inflation at some point.” With Bloomberg