July 19, 2021 at 07:10 pm
Manila Standard Business
The stock market slumped Monday along with the rest of Asia, following big losses on Wall Street as inflation and the spreading Delta coronavirus variant fueled worries about the global recovery, while oil prices also sank after top producers reached a deal to hike output.
The Philippine Stock Exchange Index tumbled 106.63 points, or 1.6 percent, to 6,587.20 on a value turnover of P6.5 billion. Losers overwhelmed gainers, 159 to 43, with 48 issues unchanged.
Major property developer Ayala Land Inc. of the Ayala Group shed 3.9 percent to P34.10, while parent Ayala Corp. fell 3.3 percent to P745.
Robinson Land Corp. of the Gokongwei Group dropped 4.8 percent to P15.32, while Metropolitan Bank & Trust Co. of the Ty Group, the second-biggest lender in terms of assets, declined 3.6 percent to P46.10.
The rest of Asian markets sank Monday. Hong Kong was the worst hit after the United States warned businesses about the “growing risks” of operating in the city as China tightens its grip, raising concerns about its future as a financial hub.
With vaccines being rolled out around the world and some governments easing lockdowns, equities enjoyed a healthy first half of 2021, with many markets hitting records or multi-year highs as traders bet on a strong rebound from the pandemic.
But the spread of the highly transmissible Delta variant has thrown a spanner in the works as leaders in several countries—particularly those with slow inoculation programs—reimpose lockdowns and other containment measures.
Even in parts of the world where most people have been jabbed and re-openings continue, such as England, there is a growing concern about surging infections.
That has raised worries the recovery will not be as strong as first hoped.
After Wall Street’s sharp losses, Asia followed suit on Monday.
Hong Kong suffered sharp losses, with traders also weighing a US advisory on doing businesses there in light of China’s clampdown.
The much-anticipated report acknowledged the former British colony “retains many economic distinctions” from the mainland, including stronger protections of intellectual property, but raised concerns about the fragile working environment following the introduction of a national security law last year.
Tokyo, Sydney, Singapore, Seoul, Mumbai, Bangkok, Taipei, Jakarta and Wellington were also in the red. Shanghai ended flat.
Meanwhile, a surge in inflation has rekindled speculation the Federal Reserve and other central banks could be forced to wind down their ultra-loose monetary policies and raise interest rates sooner than expected.
Treasury Secretary Janet Yellen last Thursday warned prices rises will continue to be strong for the next few months but that they would eventually slow down.
“Markets are... dealing with a burst of inflation pressure that hasn’t been observed for quite some time,” said Michael Hood at JP Morgan Asset Management.
He said there was “uncertainty about whether it will be temporary or lasting, and a Federal Reserve that is viewing all this through the lens of an untested and somewhat vague new framework, which they’ve not been able to communicate very clearly about.” With AFP