Share prices tumbled Wednesday on worries about rising inflation and interest rates, and a possible recession in the world’s biggest economy.
The Philippine Stock Exchange Index slumped 155.11 points, or 2.4 percent, to 6,319.42 on a value turnover of P11 billion. Losers routed gainers, 137 to 40, with 53 issues unchanged.
Universal Robina Corp. of the Gokongwei Group, the biggest snack food maker, sank 6 percent to P94, while major property developer Ayala Land Inc. of the Ayala Group fell 4.3 percent to P28.10.
SM Investments Corp. of the Sy Group dropped 4.2 percent to P795, while fiber broadband provider Converge ICT Solutions Inc. declined 3.6 percent to P21.35.
The rest of Asian equities were mixed Wednesday with investors nervously awaiting a Federal Reserve interest rate decision that has taken on greater significance since a forecast-busting inflation report sent shockwaves through world markets.
In Asia markets were mixed with some seeing a pick-up on bargain-buying after the week’s painful start.
Hong Kong and Shanghai enjoyed some healthy buying after data showed an improvement in Chinese retail sales and factory output last month thanks to an easing of COVID restrictions in major cities.
The readings lifted hopes that government support can help lift the world’s number two economy out of its torpor.
Singapore and Mumbai were also in positive territory, while Tokyo, Sydney, Seoul, Taipei, Bangkok and Jakarta slipped.
Trading floors saw a sea of red at the start of the week after data showed US consumer prices soared at their fastest pace in four decades last month, confounding hopes they were stabilizing and putting pressure on officials to act.
The news ramped up bets that the central bank would hike interest rates at a steeper and faster pace than expected as it struggles to retain credibility.
Before Friday’s data, the Fed had been tipped to lift borrowing costs by half a point when its policy meeting ends Wednesday but investors are now widely anticipating a three-quarter point increase, with some even suggesting one percentage point.
The moves fueled worries that the tighter monetary conditions will deal a blow to the US economy and potentially send it into recession next year.
Still, many observers say acting now is the only option available to policymakers if they want to rein in prices and prevent stagflation.
“The sooner they are going to be clear about how quickly they are going to raise rates and what is an acceptable rate of inflation for them, the sooner markets will calm down,” Wincrest Capital’s Barbara Ann Bernard told Bloomberg Television.
And StoneX Financial’s Matt Simpson added: “A bullish outcome for risk-appetite is the well-telegraphed 75-basis-point hike, conviction from the Fed that they’ll manage a soft landing, alongside a downwardly revised CPI forecast for good measure.”
But he warned that a half-point increase “could inadvertently weigh on sentiment as markets are concerned the Fed aren’t taking inflation seriously enough.” With AFP