The stock market sank Wednesday after the peso dropped near its all time-low level against the US dollar Tuesday and on hawkish signals from the US Federal Reserve of more aggressive rate hikes.
The Philippine Stock Exchange Index tumbled 94.57 points, or 1.5 percent, to 6,255.37 on a value turnover of P5.5 billion. Losers overwhelmed gainers, 139 to 44, with 49 issues unchanged.
Metropolitan Bank & Trust Co. of the Ty Group, the second-biggest lender in terms of assets, slumped 4.1 percent to P47.65, while Emperador Inc. of business tycoon Andrew Tan, the largest liquor maker, fell 2.1 percent to P17.42.
Major property developer Ayala Land Inc. of the Ayala Group declined 3.4 percent to P24.40, while parent Ayala Corp. dipped 2.6 percent to P604.
The rest of Asian stocks were mixed Wednesday as traders struggled to recover some of the losses suffered at the start of the week, while oil bounced from a rout, though recession alarms continue to ring loud.
The euro clawed its way back slightly after hitting parity with the dollar for the first time in two decades, though it remains under pressure from growing concerns about an energy crisis across the eurozone and the European Central Bank’s slower pace of monetary tightening.
Traders are also awaiting the release of a series of key indicators this week, including the all-important consumer price index later Wednesday, with expectations for another increase to a fresh 41-year high.
Another big spike in prices will reinforce the Federal Reserve’s determination to lift interest rates 75 basis points for a second successive month in July, adding to concerns that officials could go too far and tip the economy into recession.
Still, Lauren Goodwin of New York Life Investments said policymakers were unlikely to shift from their hawkish tilt for now.
“This is widely expected to be a really strong print,” she told Bloomberg Television.
“Even if it is not, I don’t think that changes the Fed’s perspective in a couple of weeks. We won’t have enough evidence that inflation is convincingly turning over.”
In a further sign of the pressure being felt around the world from surging prices, the New Zealand and South Korean central banks each lifted rates 0.5 percentage points Wednesday, the first such increase by Seoul since 1999.
After losses on Wall Street, Asian equities were mixed. Shanghai edged up after data showed a forecast-beating jump in Chinese exports, while there were also gains in Tokyo, Sydney, Seoul, Wellington and Taipei.
However, Hong Kong was unable to hold earlier gains, while Singapore and Jakarta and Mumbai were in the red.
Stephen Innes at SPI Asset Management said equities could continue to struggle owing to a perfect storm of crises engulfing trading floors.
“Typically, equity markets can deal with one risk relatively well,” he said in a note. “But the current setup of sticky inflation, rapid Fed tightening, growth/recession risks and excessive rates volatility, to name a few, have at times left investors defenseless.
“And with the market coalescing to a bearish consensus, stocks are having trouble sustaining a meaningful rally.” With AFP