Stock market declines; Metrobank, BDO down

The stock market fell Thursday, along with the rest of Asia, after a sobering Federal Reserve assessment of the US economic outlook, and as talks remained deadlocked on a stimulus bank officials say is urgently needed.

The Philippine Stock Exchange Index shed 36.72 points, 0.6 percent, to 6,005.40 on a value turnover of P4 billion. Losers overwhelmed gainers, 131 to 64, with 46 issues unchanged.

Metropolitan Bank & Trust Co., the second-biggest lender in terms of assets, dropped 3.6 percent to P34.70, while BDO Unibank Inc., the largest bank, declined 3 percent to P89.05.

Nickel Asia Corp., the biggest nickel producer, fell 3.3 percent to P2.93, but Manila Water Co. Inc. of the Ayala Group advanced 4 percent to P13.60.

Hong Kong shed 1.9 percent and Tokyo closed percent lower while Shanghai dropped 1.3 percent and Seoul tumbled more than three percent.

Sydney eased 0.8 percent and Taipei was also more than three percent off. Singapore sank 1.5 percent while Wellington and Bangkok were 0.7 percent down.

World equities have surged from a March bottom thanks to a wall of cash support from the Fed and other central banks, but with the multi-trillion-dollar fiscal rescue hammered out earlier this year now running out, US lawmakers are under pressure to stump up more.

While Democrats and Republicans dig their heels in on a new package, the chances of anything coming soon are slim.

With the coronavirus continuing to ravage the country and containment measures keeping businesses closed, minutes from the Fed’s July meeting showed it was concerned about the recovery as help for small businesses, extra money for the jobless and direct payments to all Americans come to an end.

“A number of participants observed that, with some provisions of the CARES Act set to expire shortly against the backdrop of a still-weak labour market, additional fiscal aid would likely be important for supporting vulnerable families, and thus the economy more broadly, in the period ahead,” according to the minutes.

Policymakers added that the “prospects for further substantial improvement in the labor market would depend on a broad and sustained reopening of businesses,” which would “depend in large part on the efficacy of health measures taken to limit the spread of the virus.” 

Bank boss Jerome Powell has led repeated calls for more government support for the economy.

The bank is likely more worried about the pace of the recovery “given the stalemate on fiscal stimulus in Washington”, Marvin Loh, at State Street, said.   

“The Fed will continue to do what it can, but it does   feel   that fiscal is as important in the recovery process as monetary, and their tools to get funds to   Main Street   remain constrained.”

Focus is now on US jobless claims data for last week, which will be released later in the day and will give the latest up-to-date snapshot of the economy.

The minutes sent US markets, which had been enjoying more gains, into the red on concerns the bank would not be providing any more of the easing measures that have kept stocks afloat for so long.

And Asia followed suit. With AFP