Stock market retreats; Globe, ALI decline

Stocks fell slightly Friday ahead of a much-anticipated speech by Federal Reserve chief Jerome Powell on plans for tapering monetary policy with some top bank officials calling for a move within months.

The Philippine Stock Exchange Index slipped 33.91 points, or 0.5 percent, to 6,786.62 on a value turnover of P6.9 billion. Losers beat gainers, 100 to 84, with 64 issues unchanged.

Globe Telecom Inc., the second-biggest telecommunications company, dropped 3.4 percent to P2,848, while DTO CME Holdings Corp., the third mobile phone firm, skidded 4 percent to P8.60.

Major property developer Ayala Land Inc. of the Ayala Group declined 2.3 percent to P33.50, while Nickel Asia Corp., the largest nickel producer, fell 3.8 percent to P5.51.

Asian equity markets were mixed Friday. The cautious end to the week followed a drop on Wall Street, with sentiment also jolted by geopolitical concerns after a suicide attack at Kabul airport that left dozens dead, including 13 US servicemen.

While the spread of the Delta variant of COVID has raised concerns about the global recovery outlook, the general consensus is that the vast sums of financial support provided by the Fed will likely come to an end next year as the economy gets back on track.

Hong Kong ended flat but was weighed by a report saying China was planning a further tightening of rules for its firms to list overseas, making it even harder for them to raise cash in the lucrative US markets.

Tokyo, Sydney, Singapore and Jakarta also fell.

But Shanghai was buoyed by a report that China’s central bank was looking at fresh ways to support businesses, with a cut in the amount of cash that lenders must keep in reserve being considered. There were also gains in Seoul, Wellington, Taipei, Mumbai and Bangkok.

Powell’s address to the annual Jackson Hole symposium of central bankers and economists later Friday will be closely watched for an idea about plans to reduce the bond-buying that has helped support the pandemic recovery, though a timetable is not yet expected.

Analysts say the timing of the taper is crucial as it could also give an indication of when to expect interest rates to go up.

Still, three leading Fed officials have called for the bank to begin winding down soon.

Dallas Fed president Robert Kaplan said he was eyeing an October move or shortly after.

The hawkish Kaplan had surprised many last Friday by saying he was open to rethinking his view on withdrawing support in light of the spread of Delta, but in an interview Thursday said his latest position was based on conversations with business contacts.

Meanwhile, St. Louis boss James Bullard called for a start later in the year, a call echoed by the Kansas City Fed’s Esther George.

“An announcement on tapering is highly likely to come before the end of the year, something even the doves on the committee seem to agree on,” said National Australia Bank’s Tapas Strickland, pointing out that policy meetings are set for September, November, and December. 

“What will be as much, if not more important than the start date will be how quickly the Fed decides to taper and whether the Fed attempts to de-link the market’s perception that tapering ‘starts the clock ticking’ on rate hikes.” With AFP