PSEi tumbles on US jitters

The local stock barometer slipped below the 7,300 mark on Wednesday as concerns on the implementation of US president Donald Trump’s reform program and jitters on commodity prices spooked global markets.

Tracking an overnight sell-off in Wall Street, the Philippine Stock Exchange index lost 68.38 points or 0.93 percent to close at 7,254.93.

Foreign investors were net sellers at the local stock market, resulting in net outflows of P958 million.

“A confluence of factors led to the PSEi’s decline. U.S. stocks suffered their worst single session since October as financials took a serious beating, their worst since the initial Brexit-driven downdraft. Continuing fallout from the dovish / less hawkish FOMC (Federal Open Market Committee), anxiety over the Trump agenda ahead of Thursday’s key vote on healthcare and fundamental weakness in autos/auto lenders and energy as oil revisited new lows for the year added to the overall negative tone,” said Luis Gerardo Limlingan, managing director at local stock brokerage Regina Capital Development.

Overnight, the closely-watched Dow Jones Industrial Index slid by 237.85 points or 1.14 percent to close at 20,668.01, casting gloom on global markets.

“The inability of reflation trades to perform following last week’s dovish (US Federal Reserve) Fed hike coalesced into a capitulation overnight. A mix of factors contributed, including deterioration in US policy expectations and supply headwinds to commodity markets. However, data surprises from around the world remain robust, suggesting that this is likely a tactical consolidation of market positioning rather than the start of a more serious reassessment of the global business cycle,” Citigroup said in a research note.

“In the short-run, emerging markets are likely to follow the lead from the deterioration in equity and commodity market sentiment. However, as investor positioning in EM (emerging markets) isn’t particularly heavy (especially in Asia), and given the support from lower US yields and the ongoing softening in the dollar, we do not anticipate a significant EM selloff in response to the overnight developments. We expect instead that EM investors will adopt a wait-and-watch stance at this time to assess how much more weakness may be likely in the commodity and US equity markets,” Citi added.

At the local market, all counters ended in the red but the most battered were the holding firms and services counters which both fell by over 1 percent.

Value turnover for the day amounted to P7.73 billion.

There were twice as much decliners (127) than advancers (57), reflecting negative market breadth.

The PSEi was weighed down most by MPI and JG Summit which both slumped by over 3 percent while BDO, Puregold, GT Capital, ICTSI and Megaworld all declined by over 2 percent.

Ayala Land, Metrobank, SM Investments, DMCI and PLDT all slipped by over 1 percent.
Semirara also declined.

Outside of the PSEi, Cemex continues to fall, declining by over 4 percent.

On the other hand, Security Bank gained 1 percent while Ayala Corp., UEC and AEV also firmed up.