Stocks retreat; Globe, Converge lead losers

Share prices retreated Thursday on profit taking, with investors waiting for catalysts that could nudge them to actively trade in the market.

The Philippine Stock Exchange Index shed 49.83 points, or 0.7 percent, to 7,369.27 on a value turnover of almost P8 billion. Losers overwhelmed gainers, 126 to 62, with 51 issues unchanged.

Fiber broadband services provider Converge ICT Solutions Inc. fell 3.6 percent to P30.35, while Globe Telecom Inc., the second-biggest mobile player, declined 2.8 percent to P3,500.

GT Capital Holdings Inc. of the Ty Group dropped 2.9 percent to P602, while unit Metropolitan Bank & Trust Co., the second-largest lender in terms of assets, lost 2 percent at P50.50.

The rest of equity markets in Asia were mixed in edgy trade Thursday as a batch of strong economic data spurred expectations that the Federal Reserve will withdraw its vast financial support and lift interest rates earlier than thought.

The S&P 500 and Nasdaq closed Wednesday with healthy gains ahead of the Thanksgiving break.

But the Dow edged slightly lower, and Asia largely followed suit.

Tokyo led gains thanks to a rally in the dollar against the yen that helps exporters—while Wellington, Taipei and Jakarta also edged up.

Hong Kong, Sydney, Wellington, Taipei, Mumbai and Jakarta were up, though Shanghai, Singapore and Bangkok edged down. Seoul was weighed by the South Korean central bank’s decision to lift interest rates for a second time.

A drop in jobless claims to a five-decade low, along with a surge in consumer income and spending, reinforced optimism that the United States is well on the recovery track—but added to pressure on the central bank to prevent overheating.

The readings came as minutes from the Fed’s November policy meeting showed officials were moving towards tapering their vast bond-buying program—known as quantitative easing—at a faster pace as they try to tame rocketing prices.

While officials agreed to lower the number of bonds bought each month from the start of November, the minutes said that “some participants preferred a somewhat faster pace of reductions that would result in an earlier conclusion to net purchases.”

They added that the policy board would be prepared to “raise the target range for the federal funds rate sooner than participants currently anticipated if inflation continued to run higher than levels consistent with the Committee’s objectives”.

Meanwhile, San Francisco Fed President Mary Daly—usually seen as a policy dove—is also coming around to the idea of a speedier withdrawal of stimulus. She said she was “leaning towards” a lift in borrowing costs, adding it “wouldn’t surprise me at all if it’s one or two by the latter part of next year.”

The surge in inflation around the world has led several central banks to tighten the policies put in place at the start of the pandemic that have been a key driver of the global recovery and market rally to record or multi-year highs in the past year and a half.

The latest strong US data do not “speak to an economy in need of the type of support the Fed is currently giving it and add weight to the concerns the Fed is behind the curve when it comes to monetary policy,” said Michael Hewson of CMC Markets. With AFP