Stocks fall on profit taking; Converge and Globe down

Stocks slumped Thursday on profit taking, with some investors worried over galloping oil prices that could dent the economic recovery.

The Philippine Stock Exchange Index sank 106.15 points, or 1.5 percent, to 6,951.30 on a value turnover of P13.2 billion a day after smashing the 7,000-point mark.

Fiber broadband services provide Converge ICT Solutions Inc. tumbled 14.8 percent to P37.50, while First Gen Corp. of the Lopez Group fell 8 percent to P27.60.

Globe Telecom Inc. of the Ayala Group dropped 5 percent to P3,240, but construction supplies retailer Wilcon Depot Inc. rose 8.4 percent to P34.

The rest of Asian markets rallied Thursday as investors breathed a sigh of relief that the United States looked set to avert a catastrophic debt default after Republicans offered a deal to raise the country’s borrowing limit.

Joe Biden and Xi Jinping’s decision to hold a virtual meeting also provided a much-needed boost to trading floors that have been starved of good news in recent weeks as they battle a string of problems including surging inflation, an expected taper of monetary policy and a growing energy crisis.

With just days to go before the United States runs out of cash, top Senate Republican Mitch McConnell proposed a truce, meaning Democrats can vote to hike the debt ceiling allowing the government to pay its bills until December.

Democrats indicated their support for the move, which would mean avoiding missing US repayment obligations that many experts and top officials including Biden and Treasury Secretary Janet Yellen had warned would tip the economy into recession and cause another financial crisis.

“We’re going to pay our debts, we have two months to figure out where we go from here,” Democratic Senate budget chairman Bernie Sanders said.

The offer removed an increasingly dark cloud from over markets and sent Wall Street’s three main indexes jumping out of a slumber to close Wednesday in positive territory.

And Asia picked up the baton on Thursday with Hong Kong—which has been battered this year by China’s tech clampdown, security concerns and the China Evergrande crisis—up more than three percent as bargain-buyers moved in.  

Tokyo also rose, having fallen for eight straight days.

Taipei jumped two percent and Seoul 1.8 percent. There were also healthy gains in Sydney, Singapore, Mumbai and Bangkok.

However, observers pointed out that the deal is only a reprieve and lines up a similar standoff in two months.

And White House spokeswoman Jen Psaki urged Republicans not to “kick the can down the road.”

News that Biden and Xi would hold direct talks by the year’s end—albeit online—added some optimism, raising hopes for a thawing of an increasingly frosty relationship between the superpowers.

That followed a six-hour meeting between US National Security Advisor Jake Sullivan and China’s top diplomat, Yang Jiechi, in Zurich.

Concerns about an energy crunch were also eased slightly Wednesday after the US Energy Secretary Jennifer Granholm suggested unlocking some of the country’s vast crude reserves to keep a lid on prices, which this week hit seven-year highs. With AFP