Stocks retreated amid thin trading Tuesday, as other Asian markets remain in Lunar New Year break and investors wait for the release of gross domestic product data on Thursday.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, fell 28 points, or 0.40 percent, to close at 7,041.50 as five of the six subsectors declined.
The broader all-share index also lost 4 points, or 0.13 percent, to settle at 3,686.48 on a value turnover of P5.40 billion. Gainers outnumbered losers, 103 to 89, while 48 issues were unchanged.
Seven of the 10 most active stocks ended in the green, led by Metro Pacific Investments Corp. which climbed 6.88 percent to P4.35 and Robinsons Land Corp. which went up 5.47 percent to P15.82.
Meanwhile, the peso sustained its advance, closing at 54.43 per US dollar Tuesday, up from Monday’s 54.54.
In Asian markets, Tokyo led gains Tuesday, in another day thinned by the Lunar New Year break, with sentiment boosted once more by a surge on Wall Street.
Tech firms provided the support in New York as traders gear up for the release of earnings from big-ticket firms including Microsoft and Intel.
Hopes that the Federal Reserve will slow down its pace of interest rate hikes have also given investors optimism that the US economy could avert a recession, or at least suffer only a mild contraction.
The gains come after markets suffered a wobble last week on worries about a downturn caused by a series of interest rate hikes last year aimed at bringing inflation down from decades highs.
“With little new news to guide sentiment, the overnight (on Wall Street) move could be a product of investors getting comfortable with the current macro backdrop while cleaning the slate of last week’s trepidation or simply positioning ahead on next week’s [Fed policy decision],” said SPI Asset Management’s Stephen Innes.
He added that inflation coming down suggested the days of large 75-basis-point hikes were in the past, with “most officials across the hawk-and-dove spectrum signalling a preference for a slower rate hike pace.”
After Wall Street’s rally, Asia picked up the baton on Tuesday, though most markets were shut for the holidays.
Tokyo added more than one percent for the second day in a row while Sydney, Manila, Mumbai, and Bangkok were also well up. Jakarta and Wellington dipped, however.
But while the year has started on a positive note, BlackRock Investment Institute strategists had a word of warning.
“Markets have leapt ahead this year, driven by China’s reopening, falling energy prices and slowing inflation,” they wrote.
“This has spurred hopes of a soft economic landing, plummeting inflation and interest rate cuts. We see markets vulnerable to negative surprises — and unprepared for recession.”
Oil prices were barely moved after jumping last week to their highest point since November, on demand hopes fueled by China’s reopening.
“Crude prices are wavering as the dollar stabilizes and over-exhaustion from China reopening headlines,” said OANDA’s Edward Moya.
“The economy still could roll over and some energy traders are still sceptical on how quickly China’s crude demand will bounce back this quarter.
“This week will learn a lot about the crude demand outlook after we hear earnings from the airlines and Chevron. Oil should be stuck in wait-and-see mode until we learn more about the health and outlook of the US economy.” With AFP