Stocks end flat; URC, MerryMart lead losers

The stock market closed nearly flat Friday as investors start consolidating their position amid a rise in the inflation rate last month.

The Philippine Stock Exchange Index slipped 1.12 points, or 0.02 percent, to 6,881.37 on a value turnover of P7.7 billion. Losers beat gainers, 135 to 87, with 45 issues unchanged.

The inflation rate in February surged to a 26-month high of 4.7 percent from 4.2 percent a month ago, driven mainly by higher prices of food and non-alcoholic beverages, the Philippine Statistics Authority said Friday.

MerryMart Consumer Corp., the supermarket chain owned by businessman Edgar Sia II, sank 5.7 percent to P6.12, while Nickel Asia Corp., the biggest nickel producer, fell 3.7 percent to P5.15.

Universal Robina Corp., the biggest snack food maker, declined 2.4 percent to P128.10, while Da Vinci Capital Holdings Inc., a shell company rumored to be a candidate for back door listing, sank 24.5 percent to P4.91.

The rest of  Asian markets fell further Friday after Federal Reserve boss Jerome Powell failed to soothe fears of a surge in inflation fueled by the expected global economic recovery, which many warn could force the central bank to hike interest rates earlier than thought.

US markets extended the week’s losses, with the Nasdaq down more than two percent—tech firms are more susceptible to higher rates—while the Dow and S&P 500 dropped more than one percent.

And the selling bled through to Asia, though bargain-buying at the end of another volatile week pared the morning’s deep losses.

Tokyo, Hong Kong, Sydney, Seoul, Wellington, Taipei and Mumbai all fell but Singapore, Bangkok and Jakarta ticked slightly higher. Shanghai was flat.

While the rollout of vaccines, slowing infections, easing of lockdowns and an imminent new stimulus are breathing life back into economies, investors are increasingly worried that ultra-loose monetary policies—a key pillar of a year-long equity surge—will be wound down to deal with an expected spike in prices.

That has led to a sharp sell-off across world markets with the tech-rich Nasdaq on Thursday almost sinking into correction territory—a 10-percent drop from recent highs—having touched a record peak last month.

Powell reiterated that the Fed would not tighten its policies until its goals of full employment and consistently high inflation had been met, and that was likely to be some time away.

As the economy recovers, he said “you could see prices moving up” but those increases are likely to be transient. “And this is a difference between a one-time surge in prices and ongoing inflation.” With AFP

Mona Mahajan, at Allianz Global Investors, said: “It makes logical and intuitive sense that Treasury yields should move back   up to   1.50 percent or two percent, but we are concerned with the rest of the market about the speed at which it’s getting there.”  

However, while Powell said the Fed was ready to step in when needed, traders were left disappointed that he did not indicate the bank would act on the rise in yields such as increasing its bond purchases. With AFP