Both the peso and the local stocks tumbled Thursday, after the International Monetary Fund cut its growth outlook for the US economy and amid the strong demand for the dollar near the end of the second quarter.
The Philippine Stock Exchange index, the 30-company benchmark, lost 69 points, or 0.9 percent, to close at 7,788.06 Thursday, as all six major sectors declined.
The heavier index, representing all shares, also tumbled 34 points, or 0.7 percent to settle at 4,662.65, on a value turnover of P7.8 billion. Losers outnumbered gainers, 135 to 78, while 40 issues were unchanged.
Five of the 20 most active stocks ended in the green, led by retailer SSI Group Inc. which gained 1 percent to P4.16 and food manufacturer Universal Robina Corp. which advanced 0.9 percent to P161.50.
The peso lost three centavos to close at 50.53 per dollar Thursday, its weakest level in more than 10 years. Total volume turnover reached $564.7 million, lower than $1.279 billion on Wednesday.
“Basically if there is some downgrading of the US economic prospects, that’s a negative to emerging markets because the US continues to be an important trading partner,” Bangko Sentral Deputy Governor Diwa Guinigundo told reporters at the sidelines of an event at Conrad Hotel in Pasay City.
“[The US continues to be a major] source of investments – whether portfolio or foreign direct. So that could be a negative,” Guinigundo said.
The International Monetary Fund revised its 2017 GDP growth forecast for the US downward from 2.3 percent previously to 2.1 percent, citing the inability of the administration of President Donald Trump to implement its economic policies.
The multilateral lender also reduced its growth forecast for the biggest economy in the world in 2018 to 2.1 percent from 2.5 percent.IMF said in a statement the Trump administration “intends a wide-ranging overhaul of policies, although a fully articulated policy plan has yet to emerge.”
Meanwhile, Asian equities markets followed Wall Street up, boosted by a recovery in technology firms and a rally in banks after the Federal Reserve agreed to plans by all 34 large US lenders seeking to provide big payouts to shareholders after passing stress tests.
Tokyo ended 0.5 percent higher, Hong Kong added one percent, with banking giant HSBC surging more than five percent.
Shanghai was 0.5 percent higher and Sydney jumped 1.1 percent. Seoul was 0.8 percent higher and Singapore jumped 1.2 percent, while Wellington and Taipei also posted strong gains.
In early European trade London rose 0.6 percent, Paris gained 0.3 percent and Frankfurt put on 0.5 percent.
Oil prices continued to rise, boosted by a dive in US production and biting further into the heavy losses suffered last week, when the commodity hit a 10-month low.
Asian stocks followed a rebound in the US as investors bet the global economy can withstand tighter financial conditions as growth picks up. The euro rose to the highest level in a year while oil continued to climb.
Banks and technology shares led gains in the MSCI Asia Pacific Index, after the S&P 500 Index rebounded from the biggest selloff in six weeks. The dollar slid against most major currencies, with the pound building on recent gains as Bank of England chief Mark Carney said rates may need to rise soon. Oil advanced for a sixth straight session.
Global equities are poised to close out their best start to a year since 1998, up 11 percent and trading at an all-time high. Investors are putting their faith in the robustness of earnings as the economy continues its recovery, shrugging off a swath of worries from oil’s slump into a bear market to the political wrangling in Washington.
After nine years of central bank stimulus, the debate intensified this week around the impact of tighter policies as officials from Europe to the U.S. dished out hawkish messages to investors.
The euro surged 1.4 percent on Tuesday then had a tumultuous Wednesday session amid speculation investors misjudged comments from European Central Bank President Mario Draghi. U.S. banks have rallied this week as Federal Reserve chief Janet Yellen reiterated that the central bank’s tightening is on track. They extended gains after the close of regular trading Wednesday as banks received the greenlight from the Fed for capital return plans. With Bloomberg, AFP