Stocks plunged Wednesday as the peso and other major currencies plunged against the US dollar and on fears of a bigger rate hike from the Federal Reserve Board.
The Philippine Stock Exchange Index slumped 115.52 points, or 2.3 percent, to 6,554.08 on a value turnover of P4.8 billion. Losers overwhelmed gainers, 115 to 59, with 50 issues unchanged.
Major property developer Ayala Land Inc of the Ayala Group sank 4.5 percent to P28.55, while sister unit ACEN CORP. dropped 3.7 percent to P7.03.
BDO Unibank Inc. of the Sy Group, the biggest lender in terms of assets, fell 3 percent to P124.20, but AbaCore Capitol Holdings Inc., a company that holds an exclusive right to lease online lottery equipment for the lotto operations of the Philippine Charity Sweepstakes Office in Visayas and Mindanao, climbed 3.1 percent to P2.66.
The dollar, meanwhile, surged Wednesday against other major currencies and equities sank after a forecast-beating US economic report gave new life to talk of a third straight blockbuster interest rate hike next month.
The services sector data showed the world’s top economy remained resilient in the face of surging prices and borrowing costs, highlighting the job the Federal Reserve has in taming inflation while trying to prevent a recession—a goal many observers doubt can be achieved.
The reading added to the gloom blanketing trading floors as investors face a range of headwinds including a worsening energy crisis in Europe, Russia’s war in Ukraine and Chinese economic woes caused by COVID-19 lockdowns.
“Overall, the (services) survey paints a picture of solid activity in the services sector of the US economy supported by wages growth suggesting the Fed still has more work to do in order to cool the economy,” said National Australia Bank’s Rodrigo Catril.
All three main indexes on Wall Street finished in the red Tuesday as they reopened after a long weekend, with expectations growing that the Fed will announce a third successive 75 basis-point rate hike later this month.
The losses in New York were tracked by Asia, where Hong Kong, Tokyo, Sydney, Seoul, Singapore, Taipei, Wellington, Mumbai and Jakarta all fell, though Shanghai and Bangkok edged up.
Several top Fed officials—including head Jerome Powell—have lined up in recent weeks to say their main focus is bringing inflation down from four-decade highs, even if that means tipping the economy into recession.
The prospect of more big rate hikes has sent the dollar soaring this year, and on Wednesday it hit a new 24-year high of 144.38 yen before easing back slightly.
The yen’s losses continued to mount despite comments from government officials hinting at possible intervention to provide support, though there was no sign the Bank of Japan would shift from its ultra-loose monetary policies aimed at kickstarting the economy.
The euro remained lodged below parity with the dollar and at a 20-year low, even as the European Central Bank prepares to ramp up rates, having done so in July for the first time in eight years. With AFP