The stock market sank Monday on profit taking on renewed concerns about Federal Reserve plans to ramp up interest rates to combat runaway inflation.
The Philippine Stock Exchange Index tumbled 159.45 points, or 2.3 percent, to 6,704.41 on a value turnover of P5.4 billion. Losers overwhelmed gainers, 132 to 62, with 39 issues unchanged.
Conglomerate Ayala Corp. of the Ayala Group slumped 4.4 percent to P736.50, while unit Ayala Land Inc. fell 2.2 percent to P28.90.
SM Prime Holdings Inc. of the Sy Group, the biggest operator of shopping malls, dropped 3.7 percent to P36.55, but Emperador Inc. of business tycoon Andrew Tan, the largest liquor maker, advanced 4.4 percent to P21.50.
The rest of Asian stocks declined Monday while the dollar rallied.
All three main indexes on Wall Street fell Friday and Asia followed suit.
Hong Kong, Tokyo, Sydney, Seoul, Mumbai, Taipei and Jakarta dropped.
But Shanghai rose after China’s central bank cut prime loan rates as it tries to bolster the world’s second-biggest economy, which has been ravaged by lockdowns as part of a zero-COVID strategy.
Singapore, Bangkok and Wellington also edged up.
All eyes are on a symposium in Jackson Hole, Wyoming where Fed boss Jerome Powell will deliver a speech that traders will follow for an idea about the bank’s next moves.
A dip in price rises and signs of economic slowdown had raised hopes policymakers would ease up—and possibly cut rates next year—after two successive, 75-basis-point hikes, helping equities rally globally.
But that optimism has slowly been eroded in recent weeks as Fed officials, including Powell, have warned that the battle against inflation was far from won, particularly as the jobs market remained resilient.
One of the latest was Richmond Fed boss Thomas Barkin, who reasserted his commitment to bringing inflation back to two percent from the four-decade high of around nine percent.
He said on Friday the policy board would “do what it takes to get there,” but warned: “There’s a path to getting inflation under control but a recession could happen in the process.”
Jonathan Millar of Barclays said it was unlikely Powell would signal a slowdown in rate hikes this week.
“It does seem like what we’ve heard from Powell so far suggests there’s quite a high bar for them to transition from aggressive hikes” to 25 basis points.
“One thing they definitely want to communicate is that they remain very much focused on issues with price stability and that they will react very cautiously to any signs of improvements in the inflation data.”
And National Australia Bank’s Rodrigo Catril added that the Fed chief will likely say that “while we may be close to the end of the beginning of the current tightening cycle, we are still a long way from the end.”
The prospect of more US hikes to come has given another boost to the dollar, which rallied against the yen and is approaching the 140 yen mark for the first time in 24 years.
It also broke parity with the euro again–after having done so last month for the first time in nearly 20 years. With AFP