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Friday, March 29, 2024

PH, Asian markets fall on Yellen’s comments

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The stock market tumbled Wednesday, joining the rest of Asia after Treasury Secretary Janet Yellen’s suggestion that US interest rates might need to be hiked, as government spending measures fan inflation and the economy surges.

The Philippine Stock Exchange Index fell 59.46 points, or 0.9 percent, to 6,299.69 on a value turnover of just P3.9 billion. Losers beat gainers, 114 to 92, with 43 issues unchanged.

JG Summit Holdings Inc. of the Gokongwei Group declined 3 percent to P50.90, while unit Universal Robina Corp., the biggest snack maker, dropped 2.7 percent to P128.

SM Prime Holdings Inc. of the Sy Group, the largest mall operator, shed 1.6 percent to P33.65, while International Container Terminal Services Inc., the biggest port operator and owned by tycoon Enrique Razon Jr., slipped 1.2 percent to P128.50.

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Asian markets mostly fell. Yellen’s comments appeared to be a deviation from the united front top officials have put up in trying to reassure investors that the Federal Reserve’s ultra-easy monetary policies will remain in place until the recovery is well on track.

Asian markets mostly dropped with Hong Kong, Wellington, Taipei and Jakarta all well down, while Singapore lost more than one percent as traders fret about a fresh spike in infections in the city that has forced officials to impose containment measures.

It has also led the city-state to review the opening of a travel bubble with Hong Kong due to open this month.

Sydney and Jakarta rose, while Mumbai was lifted after the Indian central bank pledged billions of dollars to boost its flagging vaccine program as the country battles a frightening spike in infections and deaths.

Tokyo, Shanghai, and Seoul were closed for holidays.

Investors are also awaiting the release of data on US private jobs creation later in the day, which will give clues about Friday’s key non-farm payrolls report which in turn is closely watched for an idea about the state of the economic recovery.

Former Fed chief Yellen also raised eyebrows as the Treasury Secretary usually avoids talking about central bank matters.

In a pre-recorded conversation with The Atlantic, she said borrowing costs might have to be lifted “somewhat” to temper inflation if President Joe Biden’s latest spending plans—which are worth more than $4 trillion—are enacted and the economy heats up.

That threw a spanner in the works on Wall Street where all three main indexes fell sharply, led by the Nasdaq as tech firms are more at risk from higher rates. 

However, Yellen later clarified the comments and said she was not predicting nor suggesting the Fed tighten rates, which tempered losses on the S&P 500 and helped the Dow end slightly higher. But the Nasdaq ended sharply down.

Analysts said they still expect the central bank to keep its policies accommodative for some time.

“Yellen’s comments did not specify a timeframe for rises and she clarified her comments by saying that she was not recommending FOMC rate hikes,” said Kim Mundy at the Commonwealth Bank of Australia.

“We still expect the (policy board) will be very patient as economic data improves.” With AFP

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