PSEi falls as stocks tank after US health bill failure

LOCAL STOCKS slipped on Monday to pull the Philippine Stock Exchange index (PSEi) down by 23.65 points or 0.32% to 7,245.97, largely in reaction to the developments in foreign markets, analysts said.

Luis A. Limlingan, business development head at Regina Capital Development Corp., said Philippine markets slid once again due to events in the US, namely the 11th- hour decision by Republican leaders of the US House of Representatives to abandon a bill to replace the Affordable Care Act.

Asian markets struggled as President Donald Trump’s failure on health care reform raised questions about his ability to push through tax cuts and fiscal spending to boost the economy.

Mr. Trump’s inability to get enough support from his own Republican party to “repeal and replace” the Obamacare health insurance reforms, a major campaign promise, also spurred a rush to safety assets such as gold and the Japanese yen. MSCI’s broadest index of AsiaPacific shares outside Japan was down 0.10% after posting its first weekly decline last week in three weeks.

Japan’s Nikkei fell 1.50% as the yen rebounded in the face of renewed US dollar weakness.

“Following the cancellation of the House vote on the health bill, Congress is likely to turn its attention to the Supreme Court nomination and budgetary issues,” Mr. Limlingan said.

“Preliminary discussions on tax reform could begin soon but we do not expect legislative action on tax reform until June,” he added.

The Philippine market’s movement is an extension of its previous week’s performance, which 2Trade-Asia.com’s research team said was dragged by “Wall Street’s descent at the start of the week, due to growing doubts whether US President [Donald] Trump’s agenda will be supported by its legislative body.”

Last week, the PSEi lost ground and weakened by 75.40 points or 1.03% week-on-week to 7,269.62, with most of the counters finishing in the negative territory. On Monday, the PSEi’s decline was matched by the broader allshares index, which gave up 6.74 points or 0.15% to close at 4,370. Decliners outpaced advancers at 90 to 81, while 51 issues closed unchanged.

The performance of the sector indices was mixed, with financials, industrials and holding firms retreating while services, mining and oil, and property advancing. The services sub-index was the biggest gainer with 14.19 points or 0.94% to 1,516.30. Holding firms posted the biggest drop at 59.02 points or 0.79% to 7,344.26.

“For now, it would be prudent to maintain a defensive stance, as markets are still waiting for key macro catalysts,” 2TradeAsia. com said about its expectations for the week. —