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Friday, March 29, 2024

Stock market declines; Peso rises to 58.2 vs $1

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Stocks retreated Tuesday as speculation about a rollback of China’s strict zero-Covid policies fueled market volatility in some Asian markets, even after the government vowed to stick with harsh lockdowns and testing regimes.

The PSE index, the 30-company benchmark, shed 6 points, or 0.1 percent, to close at 6,289.10 as four of the six subsectors declined. The property and financials indices went up 1.4 percent and 0.3 percent, respectively.

The boarder all-share index also fell 5 points, or 0.2 percent, to settle at 3,307.75 on a value turnover of P5.1 billion. Losers outnumbered gainers, 100 to 76, while 38 shares were unchanged.

Three of the 10 most active stocks ended in the green, led by BDO Unibank Inc. which climbed 2.7 percent to P133.50 and SM Prime Holdings Inc. which gained 2.1 percent to P34.70. Ayala Land Inc. added 1.2 percent to finish at P26.00.

Meanwhile, the peso climbed to a week-high against the US dollar following the release of favorable local economic data and on expectations that the Bangko Sentral ng Pilipinas will increase by 75 basis points the policy rate in its meeting next week.

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The peso closed at 58.275, stronger than 58.58 per dollar on Monday. It was the local unit’s strongest level in a week since it settled at 57.97 on Oct. 28. Total volume reached $954.9 million, up from $574.2 million previously.

“The US dollar declined lately after the latest month-on-month increase in the GIR data, as well as stronger jobs data and continued growth in manufacturing,” Rizal Commercial Banking Corp. chief economist Michael Ricafort told Manila Standard in a text message.

Ricafort said the dollar also declined against major global currencies to a new one-month low after the financial markets priced in another, but smaller, 50-bps Fed rate hike on Dec. 14.

“The relatively stable peso exchange rate [was] also brought about by signals recently on local policy rate hikes of as much as 0.75 on the next rate-setting meeting on Nov. 17,” Ricafort said.

He said the since the start of the year, the peso declined by P7.28 or 14.3 percent against the greenback from 50.999 in end-2021.

Asian markets were mixed Tuesday following an upbeat session on Wall Street as investors look to crucial midterm elections that polls show could upend power in Washington.

Tokyo stocks closed 1.3 percent higher, extending rallies in New York, where the dollar also retreated against the pound and the euro.

Early voting has begun in many states and most US voters go to the polls on Tuesday, with a Republican takeover of Congress likely dooming President Joe Biden’s ambitious proposals.

Polls show Republicans are likely to win at least one house of Congress―and some see the prospect of further Washington gridlock as a scenario that lessens the risk of policy uncertainty.

“This may very well be taken as a positive for equity markets over coming days,” Clifford Bennett, chief economist at ACY Securities, said in a note.

“The Biden administration, while welcomed to office by financial markets, has nonetheless delivered on being a very big spending government,” Bennett said.

“It is difficult to argue the extreme inflation and slowing economy are entirely the Biden administration’s fault, but voters will be very clear in their feelings on the matter just the same.”

On Monday, US stocks climbed, with the Dow Jones Industrial Average finishing up 1.3 percent and the broad-based S&P 500 rising 1.0 percent.

The next major data point that investors are watching is US inflation data due on Thursday, “which will be the next marker for the (Federal Reserve) on how high to take interest rates,” said Stephen Innes of SPI Asset Management.

Before the US Consumer Price Index data is released, “traders are unlikely to live bullish life to the fullest”, he predicted.

Seoul gained 1.1 percent, Taipei rose 0.9 percent and Sydney was up 0.4 percent, with Singapore also rising 0.4 percent.

But Hong Kong was down 0.4 percent after jumping nearly three percent in the previous session as investors continued to hope for a relaxation of China’s strict Covid-19 rules.

“Speculation about reopening continues to add some market volatility,” said Taylor Nugent, an economist at National Australia Bank.

“In a timely reminder of the potential for Covid policy to hit output, Apple warned iPhone shipments will be lower than previously expected after China lockdowns affected operations at a supplier’s factory,” he noted.

Shanghai closed down 0.4 percent, while Jakarta fell 0.7 percent and Wellington dropped 1.2 percent. With AFP

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