Stocks retreated Thursday along with the rest of Asia on profit taking, snapping a four-day rally where investors cheered the arrival of the vaccine in the Philippines.
The Philippine Stock Exchange Index fell 60.27 points, or 0.9 percent, to 6,882.49 on a value turnover of P7.1 billion. Losers edged gainers, 119 to 110, with 40 issues unchanged.
Major property developer Ayala Land Inc. declined 3.3 percent to P38.50, while parent Ayala Corp. dropped 2.2 percent to P764.50.
Nickel Asia Corp., the biggest nickel producer, shed 6.1 percent to P5.35, but Now Corp., owned by the Velarde family, jumped 20.1 percent to P3.40. The Anti-Red Tape Authority on Wednesday ordered the National Telecommunications Commission to assign mobile frequencies, including 5G, to NOW for its cellular mobile telephone service operation.
The rest of Asian investors fell as the rollercoaster ride on global markets continued, with fears over inflation winning the tug of war with vaccine optimism on Thursday.
After a year-long rally across the planet and with light at the end of the pandemic tunnel, focus is now on the expected surge in activity as lockdowns are eased and life returns to some semblance of normal.
And the growing belief is that a gargantuan spending splurge from pent-up consumers—and an imminent stimulus package—will light a rocket under prices, forcing central banks to wind back ultra-easy monetary policies—including record-low interest rates—that have been a key driver of the stocks surge.
After a strong performance Wednesday, Asia was back in the red. Tokyo, Hong Kong and Shanghai all fell more than two percent, while Seoul, Wellington, Taipei and Jakarta were more than one percent lower.
Sydney, Bangkok and Mumbai were also in the red. Singapore bucked the trend and edged up.
A rise in US Treasury bond yields, a crucial guide of future rate expectations, to one-year highs in recent weeks has rattled equities, and a pick-up Wednesday sparked another Wall Street plunge.
The panic has come despite repeated Federal Reserve assurances that it will not tighten policy until inflation is consistently high and employment has recovered, both of which it insists are a long way off.
The fear of higher borrowing costs has combined with a feeling that valuations may have run ahead of themselves and were due a pullback on profit-taking.
“Inflation is a concern; there is a lot of money sloshing around the system and it makes sense to have some sort of a correction right now,” Shana Sissel, at Spotlight Asset Group, said.
“And bond yields going up is the market’s implicit way of tightening since the Fed has made it clear they don’t have the intention of doing so.”
Axi’s Stephen Innes added that the US central bank “will need to fabricate a more convincing scenario to keep rate hike fever in check and avoid a colossal meltdown.”
“Since March 2020, the free-and-easy-money principle has bankrolled speculators, and that liquidity-supported house of cards could easily topple at the first sign of a Fed blink.” With AFP