PH stock market plunges amid geopolitical risks, rate cut delays
THE main composite index of the local bourse fell below the 6,500 level Tuesday as global markets declined amid the geopolitical risks and possible delay in rate cuts.
The bellwether Philippine Stock Exchange index plunged 157.46 points, or 2.4 percent, to close at 6,404.97, while the broader all-shares index dropped 68.26 points, or 1.96 percent, to finish at 3,409.85.
“The continuous sell-off was due to increasing tensions in the Middle East and worries regarding possibly delayed rate cuts by the Bangko Sentral ng Pilipinas amid upside risks to inflation,” Philstocks Financial Inc. research analyst Mikhail Plopenio said.
“The negative cues from Wall Street amid rising treasury yields also contributed to the market’s drop,” he said.
Tuesday’s sell-off extended the market’s decline to nine consecutive trading days, the longest losing streak since October 2016.
All sub-indices ended in the red as foreign funds were net sellers for the day by P1.19 billion, Seasoned financial professional Jonathan Ravelas also cited the sticky inflation/higher rates as among the the factors affecting the market. At the same time, the geopolitical tension is also adding to the uncertainty.
Meanwhile, Asian stock markets fell and oil prices climbed Tuesday on growing fears of a wider war in the Middle East after Israel’s army chief vowed a response to Iran’s unprecedented attack on his country at the weekend.
The selling came after Wall Street’s three main indexes tanked in response to forecast-beating US retail sales data that reinforced the view that the world’s top economy remained in rude health and further dented hopes for interest rate cuts this year.
Traders were also digesting figures showing Chinese expansion easily beat expectations in the first three months of the year but retail and industrial data came in well below par, suggesting leaders have much work to do to kickstart growth.
All eyes are on the Middle East after Tehran fired hundreds of missiles and drones at its regional enemy, saying the attack was retaliation for an April 1 strike on the consular annex of its Damascus embassy that killed seven Revolutionary Guards including two generals.