Profit taking pulls down market; BDO, Ayala drop

The stock market sank Wednesday on profit taking as investors appeared to run out of steam after an extended rally fueled by economic recovery hopes as coronavirus restrictions are eased around the world.

The Philippine Stock Exchange Index plummeted 144.47 points, or 2.2 percent, to 6,439.37 on a value turnover of nearly P9 billion. Losers overwhelmed gainers, 147 to 55, with 41 issues unchanged.

Security Bank Corp., the sixth-biggest lender in terms of assets, dropped 5.2 percent to P102.50, while GT Capital Holdings Inc. of the Ty Group, fell 5.1 percent to P503. 

BDO Unibank Inc., the largest bank, declined 4.5 percent to P105.50, while major property developer Ayala Land Inc. shed 4.2 percent to P36.40.

Meanwhile, equities were mixed in Asia on Wednesday.

While the World Health Organization said a record number of new virus cases were recorded globally on Monday—with Latin America, India and Russia heavily affected—European nations pressed ahead with easing strict lockdowns that have likely sent the planet into recession.

Among the latest moves, Cyprus welcomed its first tourist flights in almost three months, while France announced the Eiffel Tower would reopen on June 25.

Investor focus is on the end of the Federal Reserve’s policy meeting later in the day, the first since the United States began to reopen and Friday’s blockbuster jobs report.

The bank’s decision will be closely watched, though most observers do not expect it to further ease monetary policy, having pledged vast sums of cash as a backstop to financial markets.

“The relentless rebound in equity markets continues to endure, suggesting no one is willing to call a top,” said AxiCorp’s Stephen Innes.

“But the primary question remains: has the market’s recovery bought the Fed some time not to use all its bullets, or will they keep the pedal to the metal?”

He added: “The Fed orchestrated this market recovery, and (is) now set to offer its latest thoughts, estimates and, hopefully for market sentiment, an actionable go-forward plan.”

Tokyo, Sydney, Mumbai, Seoul, Taipei and Bangkok were all in positive territory but Shanghai, Jakarta and Wellington were lower.

Hong Kong dipped after seven days of gains, though troubled airline Cathay Pacific was up more than one percent, having soared almost 19 percent at the open a day after announcing a multibillion-dollar government-led bailout plan.

The US rally stuttered with the Dow and S&P 500 dropping on Tuesday as observers begin to worry that the surge since March’s troughs across markets may have gone too far.

“It would be no great surprise to see a period of market consolidation now as investors await decisive news on the coronavirus front to determine the direction of the next big market moves,” Paul O’Connor at Janus Henderson Investors said.

The lingering optimism provided support to higher-yielding, riskier currencies, with the South Korean won and Australian dollar up 0.5 percent against the dollar, while the Chinese yuan edged up 0.3 percent.