The Philippine peso and the stock market sank Tuesday while oil prices rallied again and nickel surged to above $100,000 as investors try to assess the impact of the Ukraine war on the world economy.
The Philippine Stock Exchange Index plummeted 310.34 points, or 4.3 percent, to a three-month low of 6,977.73 on a value turnover P12.2 billion. Losers overwhelmed gainers, 178 to 57, with 21 issues unchanged. The PSEi’s close of 6,977.73 is the lowest since Dec. 1, 2021 when the index ended at 6,947.06.
“Philippine stocks plunged yet again on worries that the rising energy prices caused by Russia-Ukraine war would slow the economy and drive inflation hotter,” said Luis Limlingan, head of sales of Regina Capital Development Corp.
The peso weakened to a new 30-month low against the US dollar on Tuesday, pulled down by the Russia-Ukraine war that impacted the price of oil in the world market.
The peso lost P0.14 to close at 52.32 from 52.18 on Monday, the lowest level since the 52.321 on Aug. 28, 2019. Total volume traded stood at $1.334 billion, down from $1.58 billion previously.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., however, said the country’s near-record high gross international reserves level “would continue to provide structural support/buffer/cushion for the peso exchange rate, especially greater protection vs. any speculative attacks, going forward.”
Bangko Sentral ng Pilipinas said on Tuesday the country’s gross international reserves rose to $107.98 billion at the end of February 2022 from the end-January level of $107.69 billion, driven by the higher value of its gold holdings and income from investments overseas.
Bank of the Philippine Island, the third-largest lender in terms of assets, slumped 7.6 percent to P91, while Metropolitan Bank & Trust Co., the second-biggest bank, dropped 5.1 percent to P52.50.
SM Prime Holdings Inc. of the Sy Group fell 5.3 percent to P37.40, while International Container Terminal Services Inc., the largest port operator and owned by tycoon Enrique Razon Jr., declined 4.4 percent to P219.
The rest Asian markets fell further Tuesday. As Russia’s invasion of its neighbor continues, commodity prices have been sent to record or multi-year highs, forcing observers to re-evaluate their outlook for the global recovery with some now warning of a period of soaring inflation and low growth or recession.
Monday’s session saw a sea of red across trading floors after the United States said it was considering banning the import of crude from Russia, the world’s number three producer, sending the price of Brent to almost $140 for the first time since 2008.
While the black gold eased back slightly from that peak, it remains elevated and continued to rise again on Tuesday.
Europe was not so keen on the US idea, with German Chancellor Olaf Scholz saying Russian oil and gas are of “essential importance” to the continent’s economy. Roughly 40 percent of EU gas imports and one quarter of its oil come from Russia.
Meanwhile, Moscow warned that in retaliation for strict sanctions imposed on it for the invasion, it could cut off natural gas supplies to Europe via the Nord Stream 1 pipeline, adding further upward pressure to crude as investors bet on a search for other sources of energy.
European gas prices hit records Monday, while other commodities sourced from Ukraine and Russia also rallied, with wheat at an all-time high and nickel breaking $100,000 a ton for the first time before easing back. With AFP