Stocks slumped Wednesday along with the rest of Asia, with recession fears continuing to build as central banks hike interest rates to combat decades-high inflation.
The Philippine Stock Exchange Index sank 117.19 points, or 1.9 percent, to 6,168 on a value turnover of P4.3 billion. Losers overwhelmed gainers, 115 to 68, with 48 issues unchanged.
International Container Terminal Services Inc. of tycoon Enrique Razon Jr., the biggest port operator, dropped 4.3 percent to P186.70, while major property developer Ayala Land Inc. of the Ayala Group, fell 4.2 percent to P26.50.
SM Prime Holdings Inc. of the Sy Group, the largest shopping mall operator, declined 3.7 percent to P35.10, while gaming company Philweb Corp. tumbled 7.6 percent to P5.50.
The rest of Asian equities and oil prices slumped Wednesday after a brief respite from last week’s painful rout across world markets.
While Asia, Wall Street and Europe all enjoyed healthy gains on Tuesday, analysts warned the downbeat mood on trading floors means the selling is unlikely to end any time soon.
Federal Reserve boss Jerome Powell’s two-day testimony to Congress this week will be pored over for an idea about officials’ plans for fighting runaway prices, which are being fanned by supply chain snarls, China’s lockdowns and the war in Ukraine.
Most observers expect them to hike rates by three-quarters of a point several more times this year, having announced such a move this month—the sharpest lift in almost 30 years.
However, while many believe the Fed’s front-loaded tightening drive is needed—allowing it to begin cutting sooner as price rises settle back—there is a building consensus that the world’s top economy is heading for a contraction next year.
“The Fed has entered into a policy cocktail that we would describe as hammer time,” Gene Tannuzzo, at Columbia Threadneedle Investments, told Bloomberg Television.
“You have to be planning defensively at this point. There are a lot of questions on all risk assets.”
In Asian trade, Hong Kong, Tokyo, Shanghai, Sydney, Singapore, Seoul, Taipei, Jakarta and Bangkok were all deep in the red.
Stephen Innes at SPI Asset Management said that while the selling from last week had abated, traders continued to fret over a recession and the prospect of more rate hikes, adding that the Fed could be more compelled to respond if oil prices surge again and push up inflation further.
“One cause of the market malaise could be the thought of business confidence catching down to consumer confidence; hence the risk in equities is for an earnings downgrade,” he wrote in a note.
“We could see that play out in the context of weaker University of Michigan sentiment on Friday, which could lead investors to conclude US consumers will start tightening their purse strings.
“Indeed, an extremely powerful equity market sell signal.”
Oil prices were feeling the heat from recessionary fears, with both main contracts tanking more than five percent at one point on demand worries caused by any recession, despite China’s reopening moves, the US holiday driving season and tight supplies. With AFP