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Market ends flat; Globe declines

The stock market closed virtually flat again Thursday, ignoring the decision of the US Federal Reserve overnight to reduce interest rates.

The Philippine Stock Exchange Index slipped 3.97 points, or 0.05 percent, to 7,911.32 on a value turnover of P4.1 billion. Losers beat gainers, 108 to 86, with 53 issues unchanged.

Globe Telecom Inc., the second-biggest telecommunications firm, fell 2.3 percent to P1,890, while GT Capital Holdings Inc. of the Ty Group lost 1.1 percent to P880.

Conglomerate San Miguel Corp., however, rose 2.8 percent to P178.80, while major property developer Ayala Land Inc. climbed 2 percent to P49.

Meanwhile, Asian markets mostly rose Thursday after the Federal Reserve cut interest rates, but investors were left unsure about its next possible move.

While the Fed met expectations with a 25-basis-point reduction, the lack of strong forward guidance disappointed many, who were also concerned about a growing split in the policy board between hawks and doves.

Equity traders have spent much of this month in a positive mood, betting that central banks are taking a more accommodative tone with monetary policy to support the stuttering global economy.

Tokyo’s Nikkei was up more than one percent ahead of the announcement but pared the gains in the afternoon to end 0.4 percent higher as the yen rallied against the dollar.

Shanghai rose 0.5 percent, Sydney and Seoul were each up 0.5 percent, Singapore added 0.1 percent and Wellington gained 0.2 percent.

However, Hong Kong, which has struggled all week under the weight of concerns about the impact on the economy of long-running, sometimes violent protests in the city, fell more than one percent by the break.   

Taipei, Mumbai, Bangkok and Jakarta also fell.

The European Central Bank unveiled a fresh round of bond-buying stimulus and another rate cut this month, and there had been hopes the Fed would indicate a further reduction in borrowing costs this year.

Fed boss Jerome Powell said the board did not expect a recession but trade uncertainty is creating “cross winds,” hitting business investment and exports. He added the bank will “will act as appropriate” to maintain economic growth.

However, the board is split, with five members expecting or preferring a rate hike by the end of the year, five seeing no change, and seven forecasting or wanting to see another cut.

Tim Foster at Fidelity International pointed out that policymakers’ so-called “dot plot” projections do not show any consensus for further cuts this year.

“After raising rates nine times in the past four years, the Fed kicked off the wave of global central bank easing with their dramatic dovish pivot in January,” he said.

“But simple rate cuts are now rather old-fashioned compared to the ECB’s comprehensive and complicated package of easing measures last week.”

And Edward Moya, a senior market analyst at OANDA, said the Fed could regret its decision to not be more forthright.

Its “lack of conviction in signaling more rate cuts will probably be a policy mistake that is wasting the effectiveness of the first two rate cuts,” he said in a note. With AFP

Topics: Philippine Stock Exchange Index , Globe Telecom Inc. , GT Capital Holdings Inc.
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