The stock market plunged Monday on fears of stricter lockdown rules after data showed a surge in new coronavirus infections.
The Philippine Stock Exchange Index sank 176.09 points, or 2.6 percent, to 6,552.46 on a value turnover of P9.2 billion. Losers overwhelmed gainers, 207 to 28, with 32 issues unchanged.
DITO CME Holdings Corp., the third major mobile phone firm, slumped 13.4 percent to P9.85, while MerryMart Consumer Corp., the supermarket chain owned by businessman Edgar Sia II, fell 12.5 percent to P4.54.
Conglomerate Ayala Corp. dropped 5.4 percent to P733, while Security Bank Corp., the eighth biggest lender in terms of assets, declined 4.8 percent to P119.
The rest of Asian markets were mixed Monday as an early rally lost momentum with attention on this week’s Federal Reserve policy meeting, which comes as investors fret that economic recovery will fan inflation and force an interest rate hike earlier than thought.
The Dow and S&P 500 ended Friday at an all-time high for the second day in a row but Asia was unable to keep up the momentum, with a morning advance fizzling.
Hong Kong, Tokyo, Sydney, Singapore and Wellington all rose but Shanghai, Seoul, Taipei, Mumbai, Bangkok and Jakarta fell.
The general mood across trading floors is of a blockbuster surge in global growth this year as coronavirus vaccine rollouts and easing of lockdowns allow life to return to a semblance of normal.
Bets on a strong rebound this year increased last week as Joe Biden signed off on his $1.9-trillion stimulus, which includes big cash handouts for struggling Americans.
The president’s pledge to ramp up the US inoculation program with an aim for herd immunity around the summer also provided some cheer to traders.
However, the government stimulus combined with an expected boost in consumer spending has also ramped up inflation expectations.
That is reflected in the spike in government debt yields, particularly benchmark 10-year Treasury notes—a canary in the coal mine for coming price increases—fanning worries the Fed will be forced to hike borrowing costs.
And while yields remain relatively low, Charles-Henry Monchau of FlowBank SA said: “It’s not just a question of level, it’s a question of pace.
“Are we going to move on the bond yields too quickly too fast for the market to adjust or is it going to be a smooth journey to higher bond yields?”
The Fed’s reaction to market angst over rising yields will be closely watched when it holds its two-day policy meeting from Tuesday.
The bank’s ultra-loose monetary policies, including record-low interest rates, have been a key pillar of the surge in equities over the past year but fears of possible tightening moves have seen that wobble in recent weeks.
Still, analysts expect it to maintain its dovish position, with governor Jerome Powell likely to reiterate that policymakers are willing to accept higher inflation to get back to full employment for the foreseeable future. With AFP