Philippine stocks opened the week below the 6,200 level as the ongoing Israel-Hamas conflict dampened investor sentiments.
The Philippine Stock Exchange index dropped 67.51 points, or 1.08 percent, to close at 6,198.83 Monday, while the broader all-share index declined 24.67 points, or 0.73 percent, to settle at 3,359.90.
Regina Capital and Development Corp. head of sales Luis Limlingan said the increasing geopolitical tension in the Middle East caused oil prices to skyrocket.
This was adding to investors’ worries over inflation rate.
Value turnover remained thin at P3.7 billion, as investors opted to stay on the sidelines.
Meanwhile, most Asian markets also sank Monday on concerns that Israel’s expected ground offensive against Hamas in Gaza could spark a regional war involving Iran, with warnings that potentially surging oil prices could further complicate central banks’ efforts to tame inflation.
After a week-long bombing campaign, Israel has amassed a huge army on the border with Gaza for what is expected to be a ground incursion aimed at flushing out militants after surprise attacks on October 7 that left hundreds dead.
Tel Aviv has ordered more than a million Palestinians to evacuate the north of the territory, fueling worries about a humanitarian crisis.
While President Joe Biden has said Israel had the right to defend itself, he told CBS news program “60 Minutes” that any move to occupy the Gaza Strip again would be a “big mistake”.
Reports said he was considering a trip to Israel after being invited during a call with Israeli Prime Minister Benjamin Netanyahu, while Secretary of State Antony Blinken is set to return Monday for his second visit since the Hamas attacks.
The possible meeting comes amid fears that the local conflict will turn regional if Iran —which has been accused of helping stage this month’s attack — becomes involved. Iran has denied involvement.
“The key uncertainty is whether a ground operation risks widening the conflict, with markets focused on whether Iran and its allies are drawn into the conflict,” said National Australia Bank’s Tapas Strickland.
JPMorgan Chase boss Jamie Dimon warned Friday of a geopolitical crisis if the fighting widened.
“This may be the most dangerous time the world has seen in decades,” he said in the bank’s third-quarter earnings statement.
“The war in Ukraine compounded by last week’s attacks on Israel may have far-reaching impacts on energy and food markets, global trade, and geopolitical relationships.”
The uncertainty weighed on Wall Street stocks, with the Nasdaq and S&P 500 both dropping, while oil prices soared almost six percent.
The Dow ended slightly higher thanks to strong earnings from JPMorgan, Citi and Wells Fargo that came on the back of elevated interest rates.
Asia was in the red, with Tokyo off two percent, while there were also steep losses in Hong Kong, Shanghai, Singapore, Seoul, Taipei, Bangkok, Wellington, Jakarta and Manila.
London, Paris and Frankfurt all opened higher.
“As a result of this continuing uncertainty and the war of words being played out in plain sight it’s hard to see much in the way of upside for stock markets unless there is a dialing back in the tension which is currently convulsing the region,” said Michael Hewson at CMC Markets.
Oil prices dipped on profit-taking after Friday’s surge.
Adding to the dour mood was news that the White House will tighten rules on Chinese access to semiconductor chips and chip-making equipment, maintaining a long-running security standoff between the superpowers, despite moves to ease tensions.
Traders will be keeping a close eye on speeches this week by several Federal Reserve decision-makers, including boss Jerome Powell, hoping for some idea about their plans for rates.
The talks come after a number of officials in recent weeks indicated they were happy to keep borrowing costs on hold, soothing concerns about more tightening that some observers fear could flip the US economy into recession. With AFP