Stocks slip as China growth worries linger

The stock market closed the week lower yesterday, with the benchmark Philippine Stock Exchange index (PSEi) finishing at 6,503.54, down by 7.33 points or 0.11 percent.

On the other hand, the broader All Shares index was flat at 3,451.78, slightly up by 0.57 points or 0.02 percent.

Unicapital Securities said spillover sentiments from China’s economic growth rate falling below expectations continued to put a drag on the market.

China’s growth rate came in at 5.2 percent last year, below the 5.3 percent market expectations, which raised concerns over the world’s biggest economy as a major trading partner of the Philippines.

Likewise, the Bangko Sentral ng Pilipinas’ estimate for full year 2023 Philippine GDP growth was pegged at 5.8 percent, below the 6.5 to 7.5 percent target.

“Much of the view on growth is currently hinged on regional and domestic inflation figures and corresponding monetary policy decisions and we view the correction to be cautionary. We expect a potential test of the 6,500 support levels in the near term,” Unicapital said.

Elsewhere in Asia, markets mostly rose following a tech-led rally on Wall Street that helped soothe traders’ concerns that the Federal Reserve will likely not cut interest rates.

US data points on inflation and jobs, and comments from central bank officials have combined with growing geopolitical tensions to drag equities in January, bringing an end to an end-of-year rally.

The readings – showing consumer inflation topping expectations and a resilient labor market – show China remained in rude health despite borrowing costs at two-decade highs.

And on Thursday, fresh figures pointed to a surprise slowdown in jobless claims, suggesting the Fed would likely have to keep rates elevated for some time to make sure inflation does not pop back up.

In light of the latest data, traders have lowered their bets on a March interest rate cut to a little more than 50 percent, down from 80 percent last week.

Still, SPI Asset Management’s Stephen Innes said: “Even as hopes for rapid interest rate cuts have recently been dented... a recession-free outlook for 2024 in the United States remains a huge positive for stocks, especially as the ongoing disinflationary pressures from China and Germany provide the dovish counterbalance.”