The stock market closed virtually flat Monday as record high US inflation ramped up concerns the Federal Reserve will have to tighten monetary policy sooner than later.
The Philippine Stock Exchange Index slipped 2.37 points, or 0.003 percent, to 6,968.14 on a value turnover of P5 billion. Losers beat decliners, 119 to 76, with 49 issues unchanged.
Major property developer Ayala Land Inc. of the Ayala Group fell 2.2 percent to P33.75, while LT Group Inc. of airline and tobacco tycoon Lucio Tan dropped 1.3 percent to P9.
Globe Telecom Inc., the second-biggest mobile phone company, however, advanced 8 percent to P3,090, while fiber internet services provider Converge ICT Solutions Inc. rose 3.2 percent to P33.35.
Meanwhile, aluminum broke $3,000 a ton for the first time in 13 years Monday on supply concerns while equity markets were mixed.
Reports that President Joe Biden was considering a fresh trade probe into China added to the downbeat mood and nullified the optimism sparked by news that he had held talks on Friday with Xi Jinping in a bid to smooth relations between the superpowers.
Hong Kong led the losers, with tech firms again taking much of the heat on lingering concerns about China’s crackdown on the sector. Market heavyweight Alibaba plunged more than four percent after Chinese regulators ordered sweeping changes to the country’s biggest payment app Alipay.
Singapore, Taipei, Mumbai, Bangkok and Jakarta were also down but Tokyo, Shanghai, Sydney, Seoul and Wellington edged higher.
After driving a healthy run-up in Asia so far this month, investor sentiment was once again roiled by data on Friday showing US factory gate inflation had soared in August to an all-time high of 8.3 percent owing to a jump in demand as well as supply and labor shortages.
The reading was fueled partly by a sharp rise in commodity prices, a concern highlighted by news that aluminum had rocketed past $3,000 a ton for the first time in 13 years, owing to concerns about supplies in light of a coup in major bauxite producer Guinea as well as low Chinese output.
The data ramped up speculation about the Fed’s plans for monetary policy.
Its boss Jerome Powell has already indicated that the central bank will likely start tapering its vast bond-buying program—which has been a key driver of the economic and equity markets recovery—by the end of the year.
But the latest figures could cause officials to bring forward their timeline. The release Tuesday of consumer inflation has now taken on more significance.
“With the US Federal Reserve due to meet next week, and the narrative clearly moving towards a tapering of asset purchases sooner rather than later, there appears to be a build up in anxiety that the continued rise in inflationary pressure may well be much more persistent than central bankers would have us believe,” said CMC Markets analyst Michael Hewson.
All three US indexes ended in the red on Friday, with reports of Biden’s probe adding to the selling pressure.
The president was said to be looking at Beijing’s subsidies and their effect on the US economy, the reports said, with discussions also being held on last year’s trade deal agreed by Donald Trump. With AFP