Stocks retreated Monday in line with the movement of regional markets as China’s first Covid death in six months sparked fears officials would re-impose strict, economically painful restrictions to fight outbreaks across the country.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, shed 34 points, or 0.5 percent, to close at 6,403.24, as two of the four subsectors declined.
The broader all-share index went down by 10 points, or 0.3 percent, to settle at 3,385.96, on a value turnover of P6.3 billion. Losers outnumbered gainers, 97 to 87, while 40 issues were unchanged.
Seven of the 10 most active stocks ended in the green, led by Semirara Mining and Power Corp. which climbed 4.8 percent to P32.00 and Jollibee Foods Corp. which gained 3.3 percent to P252.00.
Meanwhile, Asian markets traded lower as infections across China spiked, testing authorities’ plans to loosen their grip by lowering quarantine times for foreigners and canceling mass tests.
Beijing has in recent days moved to confine some residents to their homes and ordered others to quarantine centers.
The measures dealt a particular blow to Hong Kong’s Hang Seng Index, which fell more than one percent, extending a sell-off at the end of last week and eating further into a recent massive rally. Shanghai was also down.
“It feels like one step forward, two steps back,” said Willer Chen, at Forsyth Barr Asia.
“It is super hard to reopen in the short term given winter is coming and cases are at a super high level and spreading across the whole country.”
There were also losses in Sydney, Seoul, Singapore, Taipei, Mumbai and Jakarta.
Kuala Lumpur dropped with the ringgit after the Malaysian elections offered no clear winner, fuelling uncertainty.
Tokyo, Bangkok and Wellington bucked the trend.
Regional investors brushed off a positive end to last week for US and European markets, while attention turns to the release later in the week of minutes from the Federal Reserve’s most recent policy meeting.
Global markets have enjoyed a broadly healthy November thanks to signs of China easing and indications of slowing US inflation that fanned optimism the Fed would start to slow its pace of interest rate hikes.
The well-below-forecast readings in the consumer and wholesale indexes suggested months of strict tightening measures were finally working through the economy and having results, allowing for a less hawkish Fed.
But several officials soon lined up to warn that more needed to be done to get inflation back down from four-decade highs to more bearable levels.
The sharp rise in interest rates and elevated inflation has this year sent shudders through trading floors as investors fear they will send the US economy into recession.
In the latest comments, Atlanta Fed chief Raphael Bostic said he saw borrowing costs hitting five percent –from their current levels of around four percent—before they are held.
Boston Fed president Susan Collins remained open to options for the next hike — including a fifth straight 75 basis-point lift.
However, National Australia Bank’s Tapas Strickland said: “That comment by itself sounds hawkish, but Collins overall was more cautious and also expressed confidence that policymakers can tame inflation without doing too much damage to employment.
“Instead, it was likely that comment coming after a bevy of Fed Speakers during the week that added a hawkish hue to it.”
While the mood among traders remains less than bright, there appears to be a feeling that there is some light at the end of the tunnel.
“Whether it’s the time of year or recession uncertainty, few seem inclined to chase the risk rally,” said Stephen Innes at SPI Asset Management. With AFP