Market retreats again; Synergy, AllDay climb

Stocks fell for the second straight day Thursday on another bout of profit taking and as fears about surging inflation dogged investor in the rest of Asia.

The Philippine Stock Exchange Index shed 44.03 points, or 0.6 percent, to 7,331.65 on a value turnover of P7.2 billion. Losers edged gainers, 97 to 91, with 47 issues unchanged.

JG Summit Holdings of the Gokongwei Group dropped 3.2 percent to P59.05, while major property developer Ayala Land Inc. of the Ayala Group declined 2.6 percent to P37.

Synergy Grid & Development Phils. Inc., operator of the country’s electricity grid, however, advanced 4.8 percent to P13.20, while grocery chain AllDay Marts Inc. of the Villar Group, rose 4.2 percent to P0.74.

The rest of Asian markets were mixed, though sentiment was boosted by a report saying teetering Chinese property giant Evergrande had once again avoided a default after meeting bond-payment deadlines.

US investors ran for cover and the dollar soared after a forecast-beating read on the consumer price index, which hit a 31-year high last month, putting fresh pressure on the Federal Reserve to act to prevent inflation from running out of control.

The surge—which came a day after a report showing producer prices accelerating—was fanned by a spike in the cost of various items, particularly gasoline, autos and food prices, and ramped up expectations the central bank will be forced to tighten monetary policy quicker than hoped.

While Fed officials insist the jump will be temporary as the global economy slowly returns to a semblance of normality next year, observers warned the pain could continue for some time.

“Details in the report revealed a broad-based rise in prices, challenging the notion that higher inflation is just a function of transitory factors,” said National Australia Bank’s Rodrigo Catril.

“On top of the several specials from the second quarter reappearing (cars, holidays, etc), rents are trending higher and history shows that once rents get going the trend doesn’t reverse very quickly. Meanwhile, labor costs are also rising.”

And Sarah House at Wells Fargo & Co added: “We’re going to see the inflation picture get worse before it gets better.”

Hong Kong reversed early selling to add one percent, with Evergrande surging 6.8 percent, while Shanghai climbed more than one percent.

Tokyo, Singapore, Wellington, Jakarta and Bangkok were in positive territory. Sydney, Seoul, Singapore, Taipei, Mumbai and Jakarta all fell.

All three main indexes on Wall Street, which started the week posting fresh records, sank into the red for a second successive day.

However, in Asia, the mood was a little lighter after Bloomberg News reported that China Evergrande had stumped up the cash for the interest on bonds due by the end of Wednesday averting a default again, having met two previous deadlines, and slightly easing concerns about its imminent collapse.  

Adding to the positive vibe were reports that Chinese authorities were planning to ease some restrictions on developers’ financing, which could give them more leeway to borrow cash to finish projects and raise much-needed cash. With AFP