The stock market bounced back Tuesday as fears of a Middle East conflict abated for now, but investors remained on alert for any escalation after the US assassination of a top Iranian general.
The Philippine Stock Exchange Index rose 42.83 points, or 0.6 percent, to 7,840.70 on a value turnover of P6.5 billion. Gainers beat losers, 94 to 85, with 64 issues unchanged.
Water-related stocks led gainers, with Manila Water Co. Inc. advancing 12.3 percent to P10.78 and Metro Pacific Investments Corp., which owns Maynilad Water Co. Inc., climbing to 4 percent to P3.63.
DMCI Holdings Inc., which partly owns Maynilad Water, rose 4.3 percent to P6.98, while PLDT Inc., the biggest telecommunications firm, increased 4.2 percent to P1,050.
The rest of Asian equities, meanwhile, rebounded while safe havens such as oil and gold retreated Tuesday.
With few major developments in the crisis fueled by the killing of Qasem Soleimani last week, traders were able to turn their attention back to the global economic outlook and the China-US trade deal signing planned for January 15.
Wall Street provided a positive lead, with all three main indexes reversing early losses to end in the green as traders welcomed strong service sector data from the US, Europe and Britain that provided hope that the worldwide growth slowdown was easing.
Asian markets were broadly higher, with Tokyo ending 1.6 percent up, Hong Kong adding 0.5 percent and Shanghai rising 0.7 percent.
Sydney climbed more than one percent, while Seoul jumped one percent and Singapore put on 0.7 percent. Mumbai and Bangkok were also up, while Wellington was marginally higher and Taipei eased slightly.
Observers said the limited impact on markets was mostly because the standoff is not expected to have a massive impact on global growth.
The shift back to riskier assets saw oil prices retreat, having rallied almost seven percent in the previous two days. Gold slipped from six-and-a-half-year highs.
“Putting to one side the heat and noise of the events of the last few days, and in the absence of further violence and escalations, the reality is that very little has changed,” said CMC Market analyst Michael Hewson in a note.
But analysts warned that the mood could change in a split second, with Donald Trump warning of a “major retaliation” if Iran carries out any revenge attacks.
“It’s wait-and-see mode here,” said Steve Chiavarone, at Federated Investors. “How much, if at all, do things escalate with Iran and does it ultimately impact the global economic outlook? Right now, not so much. Could it change? Sure.”
Tapas Strickland, at National Australia Bank, added: “The potential for this to spiral into a cycle of retaliation remains and markets will likely remain cautious.”
The strike on such a high-profile member of the Iranian regime has also raised the question of when and how—not if—Tehran will retaliate, which experts say will likely continue to support crude.
“The US strike in Iraq last week offers up a speculator’s delight on the belief that Iran will need to muster up a sufficient response to mobilize local nationalist support,” said AxiTrader’s Stephen Innes. With AFP