Stocks extended their slump for a third day Tuesday after the Bangko Sentral ng Pilipinas conceded gross domestic product may grow slower than expected this year due to the prolonged impact of the coronavirus pandemic.
The Philippine Stock Exchange Index declined 60.85 points, or 0.9 percent, to 6,457.79 on a value turnover of P6.1 billion. Losers overwhelmed gainers, 134 to 64, with 50 issues unchanged.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Monday the government may scale down the 2021 GDP growth forecast of 6.5 percent to 7.5 percent to around 6 percent to 7 percent to take into account the adverse effects of the latest virus curbs in Metro Manila and nearby provinces on the economy.
Universal Robina Corp., the biggest snack food maker, fell 4.6 percent to P131, while AC Energy Corp., a unit of Ayala Corp., sank 5.8 percent to P7.29.
Alliance Global Group Inc. of tycoon Andrew Tan, dropped 4.1 percent to P10.64, while DITO CME Holdings Corp., the third major mobile phone company, was down 3.8 percent to P10.60.
Meanwhile, markets mostly rose in Asia on Tuesday as investors gear up for a much-anticipated earnings season and the release of key US inflation data later in the day.
Hong Kong, Tokyo, Sydney, Seoul, Singapore and Wellington all rose but Shanghai, Taipei and Jakarta slipped.
After a recent run-up in equities that saw the S&P 500 and Dow end last week at record highs, traders are taking a breather as they await the next buying catalyst.
A forecast-busting reading on US producer price inflation last week gave markets a taste of what to expect over the next few months as the global economy emerges from last year’s crisis and vaccinations allow people to slowly return to their pre-pandemic habits.
The release of consumer price data is being closely followed. There are growing fears that reopening will send prices surging this year and force central banks to tighten the ultra-loose monetary policies—including rock-bottom interest rates—that have helped fire a year-long equity rally.
The Federal Reserve has repeatedly pledged not to change tack until inflation is elevated for some time and unemployment is under control.
Those worries have sent benchmark 10-year Treasury yields—a gauge of future borrowing costs—to one-year highs. The smooth sale of government bonds Monday soothed some concerns.
“It’s more of a wait-and-see, ahead of a week that promises no shortage of ‘rock-the-boat’ type inflation data,” said Axi strategist Stephen Innes.
“The fact that stocks remain perched near record highs suggests investors still believe the economic acceleration should be a powerful tailwind for stocks this quarter and ensure earnings growth.”
He added: “The global equity market’s reaction to this week’s data docket… will be a keen litmus test that the equity investors are happy with growth driving higher yields and continue buying into the Fed’s messaging by allowing (it) to let the economy run hot.”
Data out of China Tuesday showed imports and exports surged again in March as the world’s number two economy presses on with its recovery and other countries slowly reopen after last year’s pandemic crisis. With AFP