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Friday, March 29, 2024

Stocks up slightly; PLDT, AC Energy lead advances

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The stock market rose slightly in a tight trading range after investors ignored the expected GDP contraction in the first quarter of 2021.

The Philippine Stock Exchange Index added just 9.42 points, or 0.2 percent, to 6,326.83 on a value turnover of P4.6 billion. Losers, however, beat gainers, 122 to 82, with 43 issues unchanged.

The economy shrank in the first three months of the year as coronavirus restrictions suppressed activity, but a top official said there were signs the country was “on the mend.”  

Gross domestic product contracted 4.2 percent from a year ago, the statistics authority said, marking the fifth straight quarter of decline as efforts to combat COVID-19 deepened the country’s economic pain.

PLDT Inc., the biggest telecommunications firm, advanced 2.4 percent to P1,264, while AC Energy Corp., a unit of Ayala Corp., climbed 2 percent to P7.32.

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Aboitiz Power of the Aboitiz Group added 1.5 percent to P23.70, but Metro Pacific Investments Corp., which is into toll roads, water and electricity distribution, hospitals and infrastructure, declined 3 percent to P3.81.

The rest of equity markets tumbled in Asia on Tuesday following steep losses on Wall Street as investors grow increasingly worried about a surge in inflation that could force central banks to wind back their ultra-loose monetary policies earlier than forecast.

Tokyo and Taipei each dropped more than three percent, while Hong Kong was off two percent.

Sydney and Seoul retreated more than one percent, and there were also losses in Singapore, Wellington, Mumbai, Bangkok and Jakarta. Shanghai edged up, however.

All eyes are on the release this week of crucial data on US retail sales and consumer prices, with expectations for a sharp rise as the world’s top economy reopens and vaccines allow people to return to a sense of normality.

A massive miss on US jobs creation last week that indicated the recovery was not going to be as smooth as thought provided some relief from those fears, but a rally in commodities—particularly widely used copper and iron ore—has markets concerned that costs will spiral.

Signs that this is having an effect were seen in data from China that showed prices paid at the country’s factory gates rose last month at their fastest pace in almost four years.

Those worries continue to hover over trading floors, despite repeated assurances from the Federal Reserve that it will stick to its huge bond-buying and record-low interest rate position for as long as needed until it has unemployment tamed and inflation is running consistently hot.

While Fed bosses have said they see inflation coming in high for a few weeks owing to the low base of comparison from last year, a high reading would ramp up pressure on policymakers to make sure they do not let it get out of hand.

“Inflationary concerns will dominate the focus this week, but the base effects are widely priced in and this upcoming reading will likely only serve as a baseline,” said OANDA strategist Edward Moya.  

And there is a feeling that the issue will dog markets for some time, even as investors are confident the global economy is well on the recovery path.

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