Stocks end rally; URC, Meralco lead decliners

The stock market slumped Wednesday on profit taking to end a three-day rally that sent the benchmark index past the 6,000-point mark.

The Philippine Stock Exchange Index tumbled 71.59 points, or 1.2 percent, to 5,946.62 on a value turnover of P5.4 billion. Losers beat gainers, 97 to 87, with 52 issues unchanged.

Manila Electric Co., the biggest retailer of electricity, fell 3.2 percent to P269.80, while Universal Robina Corp., the largest snack food maker, declined 3 percent to P137.

SM Investments Corp. of the Sy Group dropped 2.9 percent to P910, while unit BDO Unibank Inc., the biggest lender in terms of assets, slipped 2.3 percent to P88.

The rest of Asian stocks were mixed Wednesday as investors trod a cautious path following a broadly positive start to the week, with focus on the outcome of the Federal Reserve’s latest policy meeting. 

Markets have enjoyed something of a respite from the roller-coaster ride seen earlier in the month, which saw a rout of previously surging technology firms, as vaccine hopes and upbeat economic data offset worries about fresh virus spikes and new containment measures.

Sydney rose more than one percent, while Mumbai, Singapore, Wellington and Bangkok were also up. Hong Kong and Shanghai drifted lower along with Seoul and Jakarta.

With US lawmakers unable to agree on a new stimulus package—despite the first running out last month, leaving millions of Americans struggling—the onus has fallen on the central bank to do much of the leg work in supporting the world’s top economy.

And while officials are not expected to unveil any fresh measures, having already indicated they will keep interest rates near zero for the foreseeable future, boss Jerome Powell’s post-meeting comments will be pored over for an idea about the outlook and clues to future policy.

Wall Street “has priced out rate hikes to 2025, and when coupled with the fact the Fed has already ruled out the possibility of negative interest rates, it will be difficult, if not next to impossible, for the (policy board) to over-deliver on the dovish side tonight”, said Stephen Innes at AxiCorp.

But National Australia Bank’s Tapas Strickland warned stocks could suffer a pullback if investors were disappointed by the outcome.

“There is a risk the market is underwhelmed by the guidance provided by the Fed,” he said in a commentary. 

“There is some expectation that with the US Congress unwilling/unable to agree to a new fiscal package, monetary policy may need to step in to fill the void. Accordingly, markets will be focused on any changes to forward guidance and to any balance sheet adjustments.”

There was little reaction to the World Trade Organization’s decision to uphold a Chinese complaint over additional US tariffs on around $250 billion of imports, which was slammed by Washington.

US Democratic House Speaker Nancy Pelosi on Tuesday announced a new attempt to break weeks of deadlock with the White House and Republican-controlled Senate on passing a new stimulus package. With AFP