Market ends three-day rally; Megaworld rises

The stock market fell Friday on profit taking to end a three-day rally, with investors still wary over rising COVID-19 cases and prospects of a stalled economic recovery.

The Philippine Stock Exchange Index slipped 36.37 points, or 0.6 percent, to 6,544.63 on a value turnover of P6.3 billion. Gainers, however, beat losers, 101 to 92, with 49 issues unchanged.

Bank of the Philippine Islands, the third-biggest lender in terms of assets, declined 1.8 percent to P82.50, while Jollibee Foods Corp., the largest fast-food chain, also dropped 1.8 percent to P174.90.

Puregold Price Club Inc., owned by retail tycoon Lucio Co, was down 2 percent to P40.20, but Megaworld Corp., the biggest lessor of office spaces, climbed 3.2 percent to P3.56.

The rest of Asian markets rose Friday, capping another painful week for investors as a forecast-beating US jobs report and Joe Biden’s pledge to double his vaccination target soothed recent worries over rising infections and new lockdowns in Europe.

However, long-running concerns over inflation caused by the expected economic resurgence continue to cast a pall over trading floors, while China-US tensions have also inched back into the narrative.

Wall Street’s three main indexes enjoyed gains after data showed US unemployment claims last week came in below 700,000 for the first time since the pandemic, reinforcing optimism that the world’s top economy is on the mend.

And Asia followed suit, with Tokyo, Hong Kong, Shanghai, Seoul, Mumbai and Taipei each adding more than one percent, while Sydney, Singapore, Jakarta and Bangkok were also up, though Wellington fell.

The US jobs figures came as Biden gave the first news conference of his presidency, at which he promised 200 million doses of COVID-19 vaccine would be administered in his first 100 days.

His pledge lifted hopes that strict containment measures could be gradually lifted, allowing life to return to a semblance of normality sooner and getting people spending again.

But the positive outlook has investors fearing a huge consumer spending splurge—along with Biden’s recently passed $1.9-trillion stimulus—will send inflation soaring and force the Federal Reserve to tighten the ultra-loose monetary policies that have been a key pillar of a year-long markets rally.

And while Fed boss Jerome Powell has repeatedly stated he will not hike interest rates from record lows until inflation is running hot for an extended period, traders are increasingly betting on an increase coming sooner rather than later. 

This has sent benchmark 10-year US Treasury yields, a barometer of future interest rates, to a one-year high.

“President Biden may yet play a part in next week’s fun and games as he is likely to release preliminary details of the follow-on $3 trillion remaking America package,” said OANDA’s Jeffrey Halley.   “Although taxes will rise to pay for part of it, more debt issuance is on the way, which could be enough to lift US bond yields once again.” With AFP