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Saturday, May 25, 2024

Market retreats on profit taking; DITO slips

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Stocks fell Thursday on profit taking as investors weigh rising oil prices in the world market ahead of the release of key US jobs data.

The Philippine Stock Exchange Index dropped 49.82 points, or 0.7 percent, to 6,791.87 on a value turnover of P18.8 billion. Gainers, however, outnumbered losers, 114 to 86, with 51 issues unchanged.

DITO CME Holdings Corp., the the third major mobile phone company, shed 3.1 percent to P9.75, while Monde Nissin Corp. declined 2.8 percent to P13.10.

Aboitiz Power Corp. of the Aboitiz Group was down 2.1 percent to P22.90, while SM Prime Holdings Inc. of the Sy Group slipped 1.7 percent to P37.40.

Most Asian markets rose Thursday, with focus on the upcoming release of key US jobs data, while traders were also trying to gauge when the Federal Reserve will begin reconsidering its ultra-loose monetary policies in light of a robust economic recovery.

Oil prices also extended gains, fueled by growing optimism that the re-openings and coronavirus vaccine rollouts will lead to a surge in activity over the coming months and ramp up demand.

Friday’s non-farm US payroll figures will provide the most recent snapshot of the world’s top economy, with expectations for a big jump as businesses restart and people return to some semblance of normality.

In Asia, the mood remained broadly upbeat though early momentum was lost through the day.

Tokyo, Sydney, Seoul, Singapore, Mumbai, Jakarta and Taipei rose, though Hong Kong was weighed by a drop in property firms. There were also losses in Shanghai and Wellington.

Observers pointed out that the recovery in the jobs market is not as smooth as hoped as some choose not to return to work yet owing to a number of issues including lingering virus fears and the handouts in President Joe Biden’s stimulus earlier this year.

And they added that increased demand for labor is adding to upward pressure on inflation—as wages rise and some companies offer cash incentives—which is already being fired along by supply shortages and high energy costs.

This in turn is causing a headache for the Fed, which has pledged to keep its accommodative monetary policy in place for the foreseeable future but also has to make sure price spikes do not get out of control.

The ultra-loose policies, including record-low interest rates, have been a key driver of a surge in equities from their nadir in April 2020. With AFP

The central bank’s Beige Book summary of the economy, released Wednesday, highlighted those issues.

Vaccinations had contributed to the “somewhat faster rate” of recovery  in recent weeks, it said, but “significant supply chain challenges continued to disrupt production.”

Employers were having trouble filling posts, which “prevented some firms from increasing output” and in a few cases forced cuts in hours of operation, before warning “looking forward, contacts anticipate facing cost increases and charging higher prices in coming months.”

National Australia Bank’s Tapas Strickland said: “The Beige Book overall does little to dissuade investor concerns around the potential for inflation.” With AFP

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