The stock market fell Wednesday along with the rest of Asia after Wall Street tumbled on bets the Federal Reserve will act more aggressively to bring inflation under control.
The Philippine Stock Exchange Index lost 46.81 points, or 0.6 percent, at 7,109.26 on a value turnover of nearly P5 billion. Losers beat gainers, 102 to 79, with 51 issues unchanged.
Conglomerate Ayala Corp. of the Ayala Group dropped 1.8 percent to P800, while unit Bank of the Philippine Islands, the third-biggest lender in terms of assets, slipped 1.1 percent to P98.10.
International Container Terminal Services Inc., the largest port operator and owned by tycoon Enrique Razon Jr., declined 1.8 percent to P222, but Semirara Mining and Power Corp. of the Consunji Group, the largest coal miner, climbed 2.9 percent to P31.50.
The rest of Asian equities sank while oil bounced from the previous day’s losses.
All three main indexes on Wall Street ended in the red, with the Nasdaq off more than two percent owing to tech firms being more susceptible to higher rates.
And the selling seeped through to Asia.
Hong Kong and mainland Chinese investors returned from a break to data indicating a sharp drop in China’s services sector caused by the imposition of lockdowns around the country including Shanghai, its biggest city.
Hong Kong dropped 1.9 percent but Shanghai recovered from early selling to end marginally higher.
Tokyo, Sydney, Seoul, Singapore, Mumbai, Jakarta, Bangkok and Wellington retreated.
While the Ukraine war continues to cast a shadow across trading floors, Fed monetary policy is at the top of the agenda this week as investors fret over how quickly officials will withdraw their vast pandemic-era financial support.
After last month’s 0.25-percentage-point hike in interest rates, the focus is now on its plans for May’s meeting, with expectations growing that it will announce a 0.50-point lift followed by several more before the end of the year.
Fed governor Lael Brainard, who is considered a dove, on Tuesday spooked traders by saying bringing inflation down from 40-year highs was of “paramount importance” and that the bank was “prepared to take stronger action” if warranted.
Brainard, who is awaiting congressional confirmation for the position of Fed vice chair, also said bank policymakers were ready to start reducing its vast bond holdings, which have helped keep borrowing costs down.
“The market might have been looking for… Brainard to at least give more balanced remarks—instead, they were at the hawkish end of the spectrum from someone like Brainard,” said Stephen Innes of SPI Asset Management.
“She was not overly hawkish, but neither did she offer anything for the doves to cling to.”
Michael Hewson at CMC Markets added that Brainard’s comments, and those from Mary Daly of the San Francisco Fed, “put into sharp relief the concerns investors have, that in looking to rein back inflation, the Fed might overplay its hand and tighten too aggressively and tip the economy into recession.”
Minutes from the Fed’s March meeting will be released later in the day and will be pored over for insights into officials’ thinking, in light of the war and recent data suggesting the world’s top economy remains resilient for now. With AFP