Stocks closed flat Wednesday, after inflation rate surged to a 27-month high of 3.3 percent in February and investors continued to assess the impact of the likely interest rate hike in the US.
The Philippine Stock Exchange index, the 30-company benchmark, closed at 7,294.56 Wednesday, as two of the six sectoral indices—services and property—advanced.
The heavier index, representing all shares, was also flat at 4,401.30, on a value turnover of P6.6 billion. Losers outnumbered gainers, 98 to 81, while 49 issues were unchanged.
Nine of the 20 most active stocks ended in the green, led by PLDT Inc. which climbed 6.6 percent to P1,550 and technology company Xurpas Inc. which gained 6 percent to P9.01. Globe Telecom Inc. advanced 4.7 percent to P1,988.
Meanwhile, Asian markets staged an afternoon recovery Wednesday following upbeat Chinese trade data, but gains were patchy with drugs firms hit by Donald Trump’s promise to slash prices.
This week has seen equity and forex traders take a step back after February’s rally, with Friday’s US jobs data in focus and the Federal Reserve preparing for a much-anticipated policy meeting on March 14.
Pharma firms tumbled in New York and across Europe after Trump tweeted: “I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!”
That came as Republicans released plans to tear up key parts of Obamacare, fuelling worries about cutbacks.
The losses seeped through to wider stock markets in the morning but news that Chinese imports had surged 38.1 percent in February—almost twice as much as forecast in a Bloomberg survey—provided a platform for recovery.
The import jump, along with a 1.3-percent fall in exports, led to a shock trade deficit and fuelled hopes that the world’s number two economy and key driver of global growth is showing signs of improvement on the domestic front.
Beijing is trying to reconfigure the economy from one driven by exports and state investment to one based on domestic consumption. The figures follow upbeat reports on 2016 growth and factory activity.
Shanghai closed 0.1 percent down—having shed 0.4 percent at one point—while Hong Kong was up 0.3 percent in the afternoon.
On Tuesday, the People’s Bank of China said its foreign exchange reserves unexpectedly bounced back above $3 trillion in February, indicating tighter controls have staunched a flood of cash out of the country as the US prepares to raise borrowing costs.
The bank has spent hundreds of billions trying to curb the capital flight, with the yuan struggling at eight-year lows against the dollar.
“It suggests that Chinese authorities have indeed managed to stem the capital flight that so many investors are worried about. Naturally it’s done that through capital controls,” said Greg McKenna, chief market strategist at CFD and forex provider AxiTrader.
“It doesn’t mean China is out of the woods, especially with the Fed about to embark on a rate hike cycle, but it seems the pressure has been released for the moment.”
Sydney was flat, Seoul added 0.1 percent, Singapore gained 0.3 percent and Wellington put on 0.2 percent. Taipei climbed 0.2 percent. With AFP, Bloomberg
