Stocks fell for a third day on risk aversion as a forecast-busting US jobs report dented hopes that the Federal Reserve will take a softer approach to hiking interest rates in its battle against inflation.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, shed 47 points, or 0.7 percent, to close at 6,442.13 Monday, as four of the six subsectors declined.
The broader all-share index also lost 15 points, or 0.5 percent, to settle at 3,403.93 on a value turnover of P5.6 billion. Losers outnumbered gainers, 105 to 83, while 54 issues were unchanged.
Four of the 10 most active stocks ended in the green, led by Converge ICT Inc. which climbed 4.2 percent to P15.94 and ACEN Corp. which gained 3.7 percent to P7.63.
Meanwhile, most Asian markets rose on Monday as traders welcomed more easing of strict Covid containment measures in China that have hammered the world’s number-two economy.
That has come as Chinese leaders take a more pragmatic approach to fighting Covid after recent protests across the country that also called for more political freedoms.
The harsh zero-Covid strategy—which saw major cities including Beijing and Shanghai face lockdowns for months—has been blamed for a sharp slowdown in economic growth this year and sent shudders through markets.
The move to reopening helped fuel “market optimism about the tailwinds of a likely acceleration in growth in 2023 for China-sensitive assets”, said SPI Asset Management’s Stephen Innes.
“Although there have been several local changes to Covid policies, China has yet to shift away from the zero-Covid policy officially. Instead, they are trying to balance the expected reopening surge in Omicron cases against minimizing economic and social costs.”
The brighter outlook lifted Asian markets with Hong Kong leading the way, jumping more than four percent while Shanghai put on more than one percent.
There were also gains in Tokyo, Sydney, Wellington, Mumbai, Singapore and Taipei.
The prospect of the world’s number-two economy kicking back into gear helped traders overcome data on Friday showing far more jobs than expected were created in the United States in November.
A big jump in wages added to concerns that the economy remained hot, meaning the Fed still had plenty of work to do to get inflation down to its two percent target.
“If next week’s consumer price index data stays hot… then our forecast for the Fed funds rate to be raised by 50 basis points each in December and February to hit 4.75-5.00 percent may prove too low,” said Mansoor Mohi-uddin, of Bank of Singapore.
“If the Fed instead needs to keep hiking well into 2023 then the near-term outlook for risk assets will remain challenging for investors.”
Still, the dollar remained under pressure against its main peers as investors lower their expectations for US borrowing costs.
China’s yuan was among the best performers, breaking below the seven per dollar level for the first time in almost three months.
The reopening of China also lifted oil prices as demand expectations improved, while a decision by OPEC and top producers to not lift output also boosted the commodity. With AFP