Shares extend decline as oil prices drop further

STOCKS extended their losses yesterday, as another big drop in oil prices revived worries over its spillover effects to economies worldwide.

The Philippine Stock Exchange index (PSEi) sank 120.97 points or 1.82% to close at 6,521.48, near the session’s low. The all-shares index plummeted 61.85 points or 1.62% to end at 3,743.97.

“We just basically mimicked oil, which was down big [on Tuesday]. It has a wide-ranging impact including the credit market in the US and the Middle East where we have a lot of OFWs (overseas Filipino workers),” Alexander Adrian O. Tiu, senior equity analyst at AB Capital Securities, Inc., said in an interview.

US crude oil tumbled 5.5% to $29.88 a barrel, bringing its twoday losses to 11%.

Wall Street succumbed to a sell- off on Tuesday night after oil giants Exxon Mobil and BP registered lower quarterly profits. Asian markets followed suit yesterday.

The MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2.1%, led by a 2.7% fall in Hong Kong shares.

Japan’s Nikkei lost 3.2%, wiping out almost all of its gains made after the Bank of Japan on Friday had announced it would introduce negative interest rates. Overnight, the US Standard & Poor’s 500 index fell 1.9%.

Oil prices have fallen about 70% in the past 18 months, largely due to a growing supply glut but also exacerbated by cooling economic growth in China and other emerging markets.

This relentless decline in oil prices and concerns on slower global growth have been weighing on stock markets worldwide since the start of the year, even dragging the PSEi to bear territory.

“The 6,600 mark was the previous technical support and now it’s acting as a resistance. The market had rallied so much from its recent low. The increase was quite significant so a lot of people are taking profits,” COL Financial Group, Inc. Head of Research April Lynn L. Tan said by phone.

All counters lost at least 0.95% each. Services was the biggest drag to the market, plunging 41.49 points or 2.76% to 1,459.06.

Likewise, holding firms fell 124.61 points or 1.99% to 6,118.75; property declined 47.81 points or 1.78% to 2,636.51; financials shed 20.57 points or 1.35% to 1,500.24; industrial slid 105.95 points or 1% to 10,438.09; and mining and oil slumped 88.80 points or 0.95% to 9,229.52.

Value turnover thinned to P5.8 billion after 651.75 million shares changed hands, from Tuesday’s P6.29 billion.

Losers dominated gainers, 123 to 51, while 33 issues were unchanged.

Foreign investors ended their buying streak, with net sales of P93.88 million registered yesterday — a reversal of the net purchases of P74.67 million.

“It’s going to be a data-dependent week, but this is a much due profit taking given our gains last week,” AB Capital’s Mr. Tiu said.