The stock market sank to near two-year low Wednesday as recession fears mount and traders grow increasingly concerned about tensions between Russia and the West.
The Philippine Stock Exchange Index tumbled 140.39 points, or 2.3 percent, to 5,879.68 on a value turnover of P6.8 billion. Losers routed gainers, 156 to 49, with 39 issues unchanged,
GT Capital Holdings Inc. of the Ty Group slumped 7.8 percent to P415.60, while Semirara Mining and Power Corp. of the Consunji Group fell 4.7 percent to P38.60.
ACEN Corp., the energy unit of the Ayala Group, dropped 7.4 percent to 5.51, while sister unit and major property developer Ayla land Inc. declined 5.5 percent to P23.05.
The rest of Asian equities and crude prices fell while the dollar held at multi-year highs Wednesday.
Investors are keeping a close eye on London, after new finance minister Kwasi Kwarteng’s tax-cutting last week sent shock waves through markets, pushing the pound to a record low and leading to dire warnings for Britain’s economy.
While Asia saw small gains Tuesday, New York and Europe ended mostly in the red again, with Wall Street jolted by data showing a surprise improvement in US consumer confidence—likely because of a dip in petrol prices—and a jump in home sales.
The figures pointed to resilience in the world’s top economy despite three successive bumper Federal Reserve rate hikes—and expectations for another in November—as it tries to tame four-decade-high inflation.
Several Fed officials have lined up this week to reassert their determination to keep hiking until prices are brought under control, even at the cost of a recession.
Observers are now betting that borrowing costs will top out at around 4.75 percent next year, and some policymakers have suggested they could remain elevated for some time.
The prospect of such tight monetary policy has battered equities, as US 10-year Treasury yields—a gauge of future rates—hit four percent for the first time since 2010.
The Dow and S&P 500 ended down Tuesday, though the Nasdaq enjoyed a slight uptick.
Asia resumed its downtrend Wednesday, with Hong Kong down more than three percent, while Seoul and Taipei sank more than two percent. Tokyo, Shanghai, and Singapore were off more than one percent.
There were also losses in Sydney, Wellington, Bangkok, and Mumbai, while London, Paris, and Frankfurt were also sharply lower.
The dollar remains the go-to unit as the Fed leads the way in central bank tightening.
“The fact we have such a strong increase in US yields is attracting flows into the US dollar,” said Nannette Hechler-Fayd’herbe, of Credit Suisse Group AG.
“As long as monetary and fiscal policy worldwide are really not coming to strengthen their own currencies, we should be anticipating a very strong dollar.”
The greenback rose against sterling, with the British currency battered by concerns that Kwarteng’s spending plan would ramp up borrowing just as the Bank of England was trying to hike rates to fight inflation, causing consternation among many observers. With AFP