Stocks plunged Monday along with the rest of Asia, as traders extended last week’s rout across risk assets, with expectations high that the Federal Reserve will announce another outsized interest rate hike this week.
The Philippine Stock Exchange Index slumped 111.35 points, or 1.7 percent, to 6,437.42 on a value turnover of close to P5 billion. Losers overwhelmed gainers, 132 to 51, with 51 issues unchanged.
Solar Philippines Nueva Ecija Corp., which is building Southeast Asia’s biggest solar farm, sank 6.9 percent to P1.35, while PLDT Inc. of Indonesia’s Salim Group, the largest telecommunications firm, fell 5.1 percent to P1,660.
SM Investments Corp. of the Sy Group declined 4.1 percent to P835, but conglomerate San Miguel Corp., the biggest beer producer, rose 3.6 percent to P98.45.
Asian equity investors continued the selling on Monday.
Hong Kong lost one percent, even after reports of the city’s government considering ending hotel quarantine rules.
Shanghai was also down despite news that megacity Chengdu was ending a two-week COVID-19 lockdown that saw 21 million people shut away.
Sydney, Seoul, Singapore, Taipei and Wellington were also in the red, though Mumbai and Bangkok inched up and Jakarta was flat. Tokyo was closed for a holiday.
With recent data showing US inflation rooted at four-decade highs, investors are increasingly pessimistic about the outlook for the global economy.
Some observers have warned of a sharp recession in many countries caused by the huge rate increases, which are hitting families in the pocket.
And with uncertainty rife owing to a range of issues, including Russia’s war in Ukraine and China’s lockdown-induced slowdown, equities are in danger of revisiting the lows they hit in June.
Several central banks are due to make rate announcements this week, with Japan and Britain among the biggest, although the main event is Wednesday’s Fed decision.
There had been a hope that after two 75 basis point increases in a row, and economic data showing weakness, officials would take their foot off the pedal this month.
But last Tuesday’s disappointing consumer price figures shocked traders and ramped up bets for a third successive 75-point rise, while some have predicted a whole percentage point move.
Policymakers, including Fed boss Jerome Powell, have said time and again their ultimate aim is to bring inflation under control, even if that means sending the economy into recession.
“It is clear that the Fed will project hawkish messaging, once again reiterating that it will bring down inflation unconditionally,” said Vasileios Gkionakis at Citigroup.
Wall Street’s worst week since June ended with more losses after FedEx reported Thursday that it shipped fewer packages than expected over the summer owing to weakness in the global economy.
That came as CEO Raj Subramaniam said he expects a global recession.
The prospect of more big Fed rate hikes is also keeping the dollar at multi-decade highs against its major peers, with the yen feeling most of the pressure as the Bank of Japan refuses to tighten policy. With AFP