Stock market drops on profit taking

The stock market slumped Wednesday on profit taking, taking its cue on the rest of Asia as investors ran for the exit following another rout on Wall Street, overnight.

The Philippine Stock Exchange Index sank 101.19 points, or 1.7 percent, to 5,932.84 on a value turnover of P5.1 billion. Losers beat gainers, 118 to 73, with 48 issues unchanged.

Major property developer Ayala Land Inc. fell 3.7 percent to P29.75, while SM Prime Holdings Inc. of the Sy Group dropped 2.9 percent to P28.30.

Metropolitan Bank & Trust Co., the second-biggest lender in terms of assets, declined 2.7 percent to P34.55, but AC Energy Philippines Inc., a unit of conglomerate Ayala Corp., climbed 6.8 percent to P3.13.

Technology and energy firms, meanwhile, were among the big losers Wednesday, while the delay of a promising vaccine trial fanned fears a fix could take longer than hoped.

US traders returned from a long weekend to resume the selling that sent shudders through markets last week, as they fretted over lofty valuations of many equities that have soared from their March troughs, helped by vast central bank support.

Last week’s retreat was centered on tech giants including Apple, Microsoft and Tesla—bringing the Nasdaq’s succession of record highs to a juddering halt—but analysts said the latest selling was broadening out.

“We don’t know exactly if this is the bottom, there could be more volatility,” Laila Pence, at Pence Wealth Management, told Bloomberg TV. “We’re taking the froth out of the market.”

Tuesday’s blood-letting in New York once again saw Apple and Microsoft in the firing line, though the standout was Tesla, which collapsed 21 percent—its worst day on record.

The Nasdaq, which had risen around 80 percent from its lows this year, is now officially in correction having lost more than 10 percent from its recent high on September 2.

And the red ink seeped into Asia, with Tokyo, Hong Kong, Shanghai, Seoul, Mumbai and Wellington all down more than one percent, while Sydney and Jakarta shed more than two percent. Singapore and Taipei were also in negative territory.

In Tokyo, SoftBank dived more than seven percent at one point on worries about its exposure to tech giants after it was revealed the conglomerate had made huge derivative bets ahead of the latest sell-off. It pared the losses, but is still down around 10 percent this week so far.

While technology firms in the region were taking a hiding, energy firms were also in the cross-hairs after oil prices suffered their heaviest losses since the early days of the pandemic.

The commodity was in retreat on concerns about demand as the global recovery stutters and after the US summer holiday season—when people traditionally take to the road—came to an end.

There are fears OPEC will begin picking up production soon, after an output cut put in place to support the market earlier in the year.

Both contracts were slightly lower Wednesday.

“Selling pressure is a little broader as the concerns in the tech sector are extending across broader markets and impacting risk sentiment,” said JP Morgan Asset Management strategist Kerry Craig.

“A market fueled by central bank largesse, economic surprises and record earnings beats in the last few months was never going to maintain its heady pace forever.” With AFP