Stocks tumbled Monday, after S&P Global Ratings reported that major companies in the Philippines face tougher sailing this year.
The PSE index, the 30-company benchmark of the Philippine Stock Exchanged, fell 84 points, or 1.27 percent, to close at 6,600.74, as all six subsectors declined.
The index representing all shares also went down by 30 points to settle at 3,525.64 on a value turnover of P5.87 billion. Losers outnumbered gainers, 92 to 86, while 58 issues were unchanged.
Only two of the 10 most active stocks ended in the green. Universal Robina corp. gained 1.69 percent to P150.80, while Ayala Corp. rose 1.46 percent to P659.50.
“The outlook for large Philippine companies this year can be summarized in a few words: persisting growth aspirations, more leverage, slowing profit growth but generally sound liquidity,” S&P Global Ratings credit analyst Xavier Jean said in a report.
“The large diversified Philippine groups have been the most active spenders and those whose leverage has increased the fastest among the top-40 companies,” said Jean. “They also resumed spending more aggressively than the smaller firms after the lows in 2020.”
Meanwhile, Asian and European markets rose Monday, tracking a rally on Wall Street fueled by a strong rebound in US regional banks and forecast-beating jobs data that eased fears over a recession in the world’s top economy.
But investors remain wary of any further upheaval in the US financial system following last week’s turmoil that saw the sale of the embattled First Republic Bank to JPMorgan Chase.
That followed the collapse in March of three other banks and the takeover of Credit Suisse by UBS, which sparked panic on trading floors.
An indication last week from the US Federal Reserve that it could pause its interest rate hikes—after announcing another increase—did little to soothe concerns.
Still, a surge Friday in US regional lenders and the strong jobs report provided a shot in the arm for Asian markets at the start of the week.
Hong Kong, Shanghai, Mumbai and Bangkok led gainers by putting on more than one percent each, while Sydney, Seoul, Taipei, Wellington and Jakarta were also in the green.
But Tokyo was dragged down by a retreat in banks as investors returned from an extended break to play catch-up with last week’s sell-off.
Paris and Frankfurt were slightly higher in the morning. London was closed for a holiday.
While the quarter-of-a-million jump in the non-farm payroll figure will give the Fed reason to hold rates higher for longer, it also showed the US economy remained resilient despite higher rates and inflation.
Investors have fretted for months that the long-running programme of monetary tightening aimed at defeating soaring prices will spark a recession.
Chicago Fed chief Austan Goolsbee warned on Friday it was “way too premature” to say if there would be another lift next month but warned the banking turmoil would likely drag on the economy.
There were growing worries about a possible catastrophic US default, with Treasury Secretary Janet Yellen warning the country could run out of cash to pay its bills as soon as the start of June unless Congress raises the debt limit.
While many commentators believe lawmakers will come to a deal to lift the borrowing ceiling, as they have every time in the past, there remain fears that the unthinkable could happen and spark an economic crisis.
“Anxiety over US default is at an all-time high,” said SPI Asset Management’s Stephen Innes.
“Historically, markets have not started worrying about a debt limit default until 2-4 weeks before the anticipated x-date (believed to be the end of July).
“But anxiety is building early this time and shifted into high gear last week after Secretary Yellen warned that a default could occur as soon as June 1.” With AFP