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Thursday, March 28, 2024

PH, Asian stocks slump again

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The stock market and the rest of Asia plunged Friday as the global rout returned with a vengeance on intensifying fears about tighter US interest rates.

The Philippine Stock Exchange Index tumbled 141.39 points, or 1.6 percent, to 8,503.69 on a value turnover of P8.5 billion. Losers routed gainers, 138 to 64, with 46 issues unchanged.

Conglomerate Ayala Corp. slumped 3.6 percent to P1,005, while property unit Ayala Land Inc. lost 2.8 percent to P43.95.

SM Prime Holdings Inc. of retail tycoon Henry Sy fell 2.8 percent to P35, but MacroAsia Corp., a leading provider of aviation-related services owned by airline and tobacco tycoon Lucio Tan, rose 3.2 percent to P25.70.

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Tokyo, Hong Kong and Shanghai, meanwhile, were among the worst hit as investors piled into safe haven assets such as gold and the yen.

The sell-off followed another battering for Wall Street, where the Dow suffered its second-heaviest daily points fall on record—the worst coming on Monday—after key US Treasury bond yields spiked fueling the likelihood of higher borrowing costs.

After a blistering 2017 and January, markets worldwide have gone into a spasm in the past two weeks on fears that the booming global economy and rising inflation will lead to higher interest rates.

“There’s some big-money players that have really leveraged to the low rates forever, and they have to unwind those trades,” Doug Cote, chief market strategist at Voya Investment Management, told Bloomberg News. “They could be in full panic mode right now.”

Japan’s Nikkei fell 2.3 percent and is now at levels not seen since mid-October, while Hong Kong dropped more than three percent to put it on course to wipe out its 2018 gains. Shanghai dived 4.1 percent to seven-month lows.

Sydney fell 0.9 percent, Singapore shed 1.7 percent and Seoul was 1.8 percent off. Wellington and Taipei were also hammered.

A key trigger of the recent pullback was last Friday’s strong US jobs report that also showed rising US wage growth, fueling speculation the Federal Reserve will lift rates more than the three times already expected this year.

At the same time, the European Central Bank is on the verge of ending its crisis-era stimulus, while the Bank of England warned Thursday that rates will likely rise.

“The message from ECB and Fed speakers, not to mention the Bank of England is that rates will continue to climb because of the strength of the global economy,” said Greg McKenna, chief market strategist at AxiTrader.

With eurozone and British borrowing rates expected to go up, the euro and pound climbed against the dollar.

The greenback edged up against the yen but was still sharply down from Thursday’s levels in Asia as panicked investors sought out safety. The dollar fell to as low as 108.50 yen from almost 110 yen the day before, hit by a weak sale of US bonds, which jacked their yield back close to four-year highs.

However, many analysts are upbeat about the future owing to healthy economic conditions in the US and global economies as well as the positive outlook for corporate earnings after Donald Trump’s massive tax cuts in December. With AFP

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