Market declines; FLI advances

The stock market slipped Friday on profit-taking in mixed trading as investors wait for catalysts that could sustain the recent rally.

The Philippine Stock Exchange Index fell 12.67 points, or 0.2 percent, to 8,141.82 on a value turnover of P6.9 billion. Gainers beat losers, 108 to 82, with 52 issues unchanged.

SM Prime Holdings Inc. of the Sy Group declined 2.3 percent to P38.30, while parent SM Investments Corp. dropped 2 percent to P960.

Filinvest Land Inc. of the Gotianun Group, however, advanced 6.1 percent to P1.91, while Megaworld Corp., the biggest lessor of office spaces, climbed 3.8 percent to P6.30.

The rest of Asian equities rose Friday, building on optimism fueled by expectations of a Federal Reserve interest rate cut, with debate now focusing on how far the central bank will go.

The gains came despite unease caused by Donald Trump accusing China of backsliding on a trade promise—just days after the two sides tentatively began phone talks on resolving their tariffs war.

After big losses at the start of the week, trading floors have been much more positive since Federal Reserve boss Jerome Powell’s congressional testimony Wednesday in which he all but flicked the switch on a rate cut at the end of the month.

A second day of testimony Thursday essentially reiterated his point.

His comments, which highlighted economic headwinds from the trade war and slowing global growth, sparked a rally on world markets.  

“We have a sitting (policy board) that is prepared to over-deliver on markets’ expectations as... Powell’s monetary policy testimony unambiguously reinforces his inclination to cut rates aggressively,” said Vanguard Markets’ Stephen Innes.

He added that even a forecast-beating inflation report on Thursday was unable to deter traders from betting on a reduction.

“Not surprisingly there is 100 percent consensus the Fed is going to cut in July. But we are still no closer to settling the  25 or 50 (basis points) July rate cut debate.”

Hong Kong added 0.1 percent and Shanghai ended 0.4 percent higher with Tokyo 0.2 percent up.

Seoul gained 0.3 percent and Wellington added 0.1 percent. Singapore added 0.1 percent despite data showing the city-state’s economy taking a serious hit from global trade uncertainty.

But Sydney, Taipei, and Jakarta were all lower.

The broad gains follow another record lead from Wall Street, where the Dow ended above 27,000 for the first time.

As investors head into the weekend Trump provided a seed of uncertainty with his tweet hitting out at China, just two weeks after meeting its President Xi Jinping and telling the world that trade talks were “back on track.”

He accused China of not fulfilling a pledge to buy more agricultural goods, saying it was “letting us down in that they have not been buying the agricultural products from our great Farmers that they said they would.”

“Hopefully they will start soon!”

While the remark did not spark a sell-off on equity markets, observers pointed out that it highlighted how much work needed to be done before the economic superpowers reach an agreement. With AFP

Topics: Philippine Stock Exchange Index , SM Prime Holdings Inc. , SM Investments Corp. , Filinvest Land Inc.
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