Market drops; Semirara, DMCI lead gainers

Stocks fell Tuesday, mirroring Asian indices as investors fretted over spiking inflation, signs of economic weakness an end to central bank support and a global energy crisis.

The PSEi, the 30-company benchmark index of the Philippine Stock Exchange, lost 16 points, or 0.2 percent, to close at 7,107.82, while the broader all-share index retreated 3 points, or 0.1 percent, to settle at 4,420.07 on a value turnover of P9.7 billion.

Gainers outnumbered losers, 100 to 87, while 65 issues were unchanged.

Four of the 10 most active stocks ended in the green, led by Semirara Mining and Power Corp. which surged 10 percent to P28 and DMCI Holdings Inc. which climbed 9.1 percent to P8.84.

World markets have come under pressure in recent weeks as the reopening of economies and supply chain snarls ramp up inflation, with a rally in commodity prices a major factor.

All eyes are on the release this week of inflation data in the United States and China, with expectations for multi-high readings that will add pressure to central banks to tighten monetary policy.

Asian markets retreated Tuesday as investors grew increasingly concerned about a growing energy crisis, spiking inflation, signs of a slowdown in the global economy and an end to central bank financial support.

China’s ongoing crackdown on the private sector and the debt woes of the country’s property giant Evergrande were also acting as a dampener on sentiment.

World markets have come under pressure in recent weeks as the reopening of economies and supply chain snarls ramp up inflation, with a rally in commodity prices a major factor.

All eyes are on the release this week of inflation data in the United States and China, with expectations for multi-high readings that will add pressure to central banks to tighten monetary policy.

The Federal Reserve has already signalled it will begin tapering its vast bond-buying programme by the end of the year as it looks to prevent prices from running out of control and the economy overheating.

While the move has been widely expected for some time, consistently high inflation is increasing the likelihood that interest rates will rise as early as next year.

The Bank of England appears close to lifting borrowing costs sooner than later, while New Zealand and South Korea have already done so.

The pressure to hike is coming as energy prices rocket to multi-year or record highs as demand ramps up ahead of the northern hemisphere winter, at the same time as supplies are limited in the wake of the pandemic lockdowns.

The issue is hitting countries across the planet and increasing worries of a worldwide fuel squeeze, with WTI oil hitting a seven-year peak, while Chinese coal prices are at a record. WTI and Brent were slightly lower Tuesday though some observers are predicting they could possibly hit $100 by the year’s end.

“Stocks are struggling as investors start to grow nervous knowing markets won’t see any quick fixes over the brewing energy crisis and inflationary pressures,” said OANDA’s Edward Moya.

“The rest of the year will be all about inflation and the nagging supply chain issues that seem poised to last for at least a couple more quarters.”

Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Singapore, Taipei and Wellington were all in negative territory, with a little profit-taking after recent gains adding to the weakness. Manila and Jakarta bucked the trend, however.

Tapas Strickland, at National Australia Bank, added: “The rise in energy prices is fuelling concerns that the transitory lift in inflation seen in the wake of the pandemic may prove to be longer lasting.”

Investors are also awaiting the beginning of the corporate earnings season, which gets under way this week with US banking giants. 

The readings will be closely watched for an idea about how firms are faring in light of the fast-spreading Delta variant of Covid and rising inflationary pressures. With AFP