Stocks snap six-day rally; Converge slumps by 17%

The stock market fell Tuesday on profit taking to snap a six-day rally that sent the benchmark index close to the 6,500-point level.

The Philippine Stock Exchange Index dropped 76.11 points, or 1.2 percent, to 6,415.08 on a value turnover of P8 billion. Losers beat gainers, 117, to 79, with, 64 issues unchanged.

Newly-listed Converge Information and Communications Technology plunged 17.1 percent to P13.92, while LT Group Inc. of tobacco and airline tycoon Lucio Tan declined 4.6 percent to P12.02.

BDO Unibank Inc., the biggest lender in terms of assets, decreased 3.5 percent to P91.90, while Puregold Price Club Inc. of retail tycoon Lucio Co slipped 3.1 percent to P42.40.

Most Asian markets, meanwhile, fell Tuesday following a sharp sell-off in New York and Europe overnight that was fueled by fears a coronavirus resurgence will force fresh economically painful containment measures.

On Wall Street, the Dow suffered its worst day since early September, dropping more than two percent while the S&P 500 and Nasdaq also suffered sharp losses. That came after Frankfurt was hammered more than three percent, with Paris and London shedding more than one percent.

And the selling continued in Asia, though the retreat was not as painful.

Hong Kong shed 0.6 percent, while Sydney dropped 1.7 percent, while Wellington also lost more than one percent. Singapore, Jakarta, Bangkok and Taipei were also in the red, while Tokyo was marginally lower.

Mumbai and Shanghai ended with gains.

Seoul gave up 0.6 percent despite data showing the South Korean economy grew more than expected in the third quarter thanks to a big jump in exports.

Traders have also given up almost any hope for a new US stimulus package being passed before next Tuesday’s election, with Democrats and Republicans blaming each other, though there are still expectations a new deal will be agreed afterwards.

The need for a big-spending rescue for hard-hit Americans is being highlighted by a big jump in new infections across the country that observers fear will deal a blow to an already shaky economic recovery.

Data this week is expected to show record US growth in the third quarter thanks to a multi-trillion-dollar stimulus agreed earlier this year alongside huge Federal Reserve support.

However, that follows a record contraction in the second quarter, while economists have tipped the economy to shrink this year.

“The second and third wave spread of Covid-19 is possibly triggering a point of no return for some industries as the economic damage borders on irreversible,” said Axi strategist Stephen Innes. “The Covid-19 induced downward spiral continues accelerating.”

With an eye on next week’s vote, he added: “We should expect price action to remain choppy in the days ahead, with investors very reluctant to put on any significant risk ahead of what promises to be a headline heavy week or two.”

David Kelly, at JP Morgan Asset Management, added: “A stimulus bill in the lame-duck session is urgently needed and could be supplemented by a more comprehensive measure when the new Congress meets, early in 2021.” With AFP