Stock market tumbles; Converge, DITO down

The stock market fell Thursday on another bout of profit taking, tracking losses on Wall Street fueled by growing inflation concerns and talk that central banks will have to tighten their monetary policies quicker than anticipated.

The Philippine Stock Exchange Index lost 50.48 points, or 0.7 percent at 7,299.34 on a value turnover of P7.8 billion. Losers overwhelmed gainers, 141 to 55, with 45 issues unchanged.

Fiber broadband services provider Converge ICT Solutions Inc. sank 5 percent to P32.30, while grocery chain AllDay Marts Inc. of the Villar Group dropped 4.9 percent to P0.77.

DITO CME Holdings Corp., the third mobile phone operator, declined 3.2 percent to P5.42, while conglomerate Ayala Corp. of the Ayala Group shed 2.6 percent to P880.

The rest of Asian markets fell Thursday,

While recent data and healthy corporate earnings indicate that consumers continue to spend, traders are increasingly fearful that more than a year of massive financial support—coupled with rocketing demand and supply chain snarls—could send prices out of control.

All three main indexes on Wall Street ended in the red, and Asia followed suit.

Hong Kong, which fell Wednesday after six straight days of gains, extended losses with tech firms among the biggest losers, while Tokyo, Shanghai, Seoul, Wellington and Jakarta also saw sizeable selling. Still, Sydney and Singapore edged up.

Mumbai also fell, with Indian mobile payments giant Paytm losing a quarter of its value on its debut, after raising $2.5 billion in the country’s biggest ever IPO, as traders questioned whether the loss-making firm would ever turn a profit.

Figures Wednesday showed inflation in the United Kingdom at a decade high and an 18-year peak in Canada—a week after US figures came in at levels not seen since 1990.

The data—which mirror big gains in other countries—have ramped up pressure on policymakers to act soon, with some commentators warning of a possible recession if they did not.

And eyes are focused on the Federal Reserve—the central bank of the world’s top economy—whose massive bond-buying program has been a key pillar of support to the global recovery and rally in stock markets.

Officials have said they will begin winding back the so-called quantitative easing measures gradually from this month and not be in any rush to hike interest rates, saying the inflation surge is only temporary.

But an extended period of reports of soaring prices could force them to re-evaluate their plans.

“With these most recent inflation readings, there is some concern that the Fed will reduce the amount of purchases—accelerate that tapering,” Michael Arone of State Street Global Advisors told Bloomberg Television.

“That would be a surprise to markets and could induce some volatility.”

The euro dropped against the dollar on bets the European Central Bank will hold off tightening policy until the new year, just as the Fed begins to taper its bond-buying. With AFP