The stock market slumped for the second straight day as traders grow increasingly worried that the Federal Reserve will continue to ramp up interest rates to fight inflation.
The Philippine Stock Exchange Index sank 86.03 points, or 1.3 percent, to 6,618.38 on a value turnover of P5.7 billion. Losers overwhelmed gainers, 151 to 37, with 40 issues unchanged.
Emperador Inc. of business tycoon Andrew Tan, the biggest liquor producer, dropped 3.7 percent to P20.70, while major property developer Ayala Land Inc. of the Ayala Group declined 3.6 percent to P27.85.
Puregold Price Club Inc. of retail tycoon Lucio Co fell 2.4 percent to P34.90, while fiber broadband provider Converge ICT Solutions slipped 2.1 percent to P18.80.
Asian markets fell again Tuesday and the dollar held gains.
Wall Street fell deep into the red with the S&P 500 and Nasdaq both off more than two percent.
And Asia followed suit.
Tokyo slid 1.2 percent and Hong Kong closed down 0.8 percent. Shanghai ended marginally lower as investors brushed off a loan rate cut by the People’s Bank of China, which also called for banks to lend more to help the battered property market.
Sydney, Seoul, Singapore, Taipei and Wellington were also down.
With the Jackson Hole symposium of central bankers and finance chiefs taking place this week, the focus is on what Fed chief Jerome Powell says about its plans to tackle prices, with many fearing officials could send the economy into recession.
The equities losses appear to mark the end of a near-two-month rally from June lows, which was powered by signs of economic weakness that observers hoped would allow the bank to be less hawkish.
“Investors are becoming increasingly concerned that Jerome Powell will deliver a hawkish speech at Jackson Hole, whilst warning that the coming months will be hard to navigate (and fan fears of a recession),” said Matthew Simpson at Sonex Financial.
“Public comments from various Fed members have become increasingly hawkish as they seemingly read from the same script ahead of Jackson Hole—which is an event typically associated with important Fed announcements.”
Bets that the central bank will keep lifting rates for some time have sent 10-year Treasury yields higher and ramped up fears of a contraction in the world’s number one economy.
But the United States is not the only economy under pressure, with governments and banks around the world facing an uphill battle against inflation, which is at multi-decade highs owing to spiking energy costs and supply chain snarls.
That comes as uncertainty rules owing to the ongoing war in Ukraine and a sharp slowdown in China caused by lockdowns and its zero-COVID strategy.
“Now markets appear to be starting to price in the prospect that inflation may well be higher for longer, although the continued surge in natural gas prices yesterday has also helped,” said CMC Markets analyst Michael Hewson.
“It is becoming ever clearer that prices are likely to remain higher for longer, and if indeed that turns out to be the case, that means rates are likely to be higher for longer.” With AFP