Stocks fell Thursday on concerns about the impact of a huge oil output cut on inflation that tempered hopes that central banks could soon ease their rate hike campaigns.
The PSEi, the 30-company benchmark index of the Philippine Stock Exchange, lost 54 points, or 0.9 percent, to close at 5,934.27 as five of the six subsectors declined.
The broader all-share index also fell 20 points, or 0.6 percent, to settle at 3,199.79 on a value turnover of P4.2 billion.
Three of the 10 most active stocks ended in the green, led by Converge ICT Solutions Inc. which went up 3.3 percent to P12.40.
International Container Terminal Services Inc. advanced 2.9 percent to P176, while San Miguel Corp. gained 2 percent to P101.00.
Meanwhile, most Asian markets rose Thursday. The mood on trading floors has been a little lighter this week, sending equities surging and weighing on the dollar, after weak readings on US factory activity and job openings fed speculation that the Federal Reserve’s strict tightening drive was having an effect.
But confidence took a knock Wednesday from a better-than-expected read on private jobs hiring and a report showing the key services sector holding up more than expected.
The figures highlighted the resilience of the US economy in the face of multiple rate hikes and point to the long road ahead for the Fed in fighting decades-high inflation.
Fed officials have lined up for weeks to insist that they will not budge from lifting borrowing costs until prices are tempered—even at the cost of a recession—while some have warned traders not to expect any cuts next year.
“After an increase in expectations of an imminent Fed pivot given the softer than expected US (factory data), the strength in the services (sector) not only eases concerns of an imminent US recession, it also refutes any notion that the Fed will look to take its foot off the tighten pedal any time soon,” said National Australia Bank’s Rodrigo Catril.
The latest US data came as OPEC and other major producers led by Russia decided to slash output by a massive two million barrels a day—the biggest reduction since the pandemic struck.
Moscow said a possible price cap by the European Union on Russian crude would have a “detrimental effect” on the global oil sector, saying Moscow would not sell to countries that introduced it.
The news gave already elevated oil prices another leg up, with both contracts piling on more than one percent Wednesday.
It also fueled concerns that energy costs—a major driver of the spike in global inflation since Russia’s invasion of Ukraine—will drive higher again.
“All the developments we have seen on the supply side at this point very much sets the stage for what we believe will be higher prices into the end of this year,” Damien Courvalin, at Goldman Sachs, told Bloomberg Television.
“With this cut and the winter seasonal demand, inventories will continue to fall.” With AFP