Stocks gain; Megaworld advances

The stock market rose Thursday on bargain hunting after a steep decline in the previous day, with select blue chips leading the rally.

The Philippine Stock Exchange Index added 36.87 points, or 0.6 percent, to 6,476.24 on  value turnover of P7 billion. Losers, however, beat gainers 117 to 72, with 51 issues unchanged.

Megaworld Corp. of tycoon Andrew Tan, the biggest lessor of office spaces, advanced 5 percent to P3.39, while major property developer Ayala Land Inc. climbed 2.8 percent to P37.40.

Globe Telecom Inc., the second-biggest telecommunications firm, rose 2.7 percent to P2,218, while SM Investments Corp. of the Sy Group, added 1.7 percent to P951.

Global equities, meanwhile, sank Thursday after the Federal Reserve offered a dose of reality on the US economy, while traders have also been spooked by fears of a second wave of virus infections in the US following fresh spikes in some states.

With ultra-low rates expected for the foreseeable future, the dollar fell against the yen on Wednesday and dropped further in Asia and has now lost more than two percent this week.

The strength in the Japanese unit sent Tokyo stocks down 2.8 percent, while Hong Kong fell more than two percent.

Syndey and Singapore each fell around three percent, Shanghai shed 0.8 percent and Seoul was 0.9 percent lower.

There were also big losses in Wellington, Taipei, Mumbai, Jakarta and Bangkok.

Markets worldwide have been rallying for several weeks as lockdown measures are eased in key regions, and after governments and central banks pledged trillions of dollars in support to kickstart growth.

But after a much-anticipated meeting, the Fed laid out its view that the world’s top economy would take time to fully recover from the worst global emergency in generations, which is expected to tip the planet into recession.

In a statement it warned the crisis “poses considerable risk to the economic outlook over the medium term,” warning of a 6.5-percent contraction this year and unemployment of 9.3 percent.

It said it will keep borrowing costs at zero until the recovery from virus shutdowns is underway, with the median forecast of policy board members showing they expect the rate to stay the same through 2022 at least.

Bank boss Jerome Powell said “the path of the economy is highly uncertain” and while last month’s surprisingly good jobs report was “probably the biggest data surprise that anybody can remember”, he noted that tens of millions of people remain out of work.

While the Fed reading was broadly in line with market expectations, it gave a jolt to traders who have been piling into stocks on hopes for a quick rebound.

Observers said it may have given traders reason to step back and focus on the divergence between market optimism and the reality on Main Street, which will eventually become Wall Street’s problem.

Kerry Craig, at JP Morgan Asset Management, said: “While the median view of how the US economy may perform is not too distant from market expectation, it’s worth noting there was a very wide range of views across committee members about the path for growth.