PSEi sinks to 6,400 level on US slowdown fears

The main index sank to the 6,400 level on Monday, hitting an over one-month low, as weak US jobs data stoked recession fears in the world’s largest economy.

The bellwether Philippine Stock Exchange index (PSEi) fell by 2.58% or 170.57 points to close at 6,434.73 on Monday, while the broader all shares index dropped by 2.23% or 80.43 points to finish at 3,516.47.

This was the PSEi’s worst close since it ended at 6,358.96 on July 2.

“Philippine shares fell back to the 6,400 territory as recession fears surrounding the US made investors worry over a hard landing,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Together with other Asian markets, the local bourse closed at 6,434.73, tumbling by 170.57 points (2.58%), as the disappointing jobs report raised fears that the Federal Reserve’s decision to keep interest rates unchanged could lead to a recession in the US,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar likewise said in a Viber message.

Stock markets tumbled on Monday and Japanese shares plummeted a gut-wrenching 13% as fears the United States could be heading for recession sent investors rushing from risk while wagering that rapid fire rate cuts will be needed to rescue growth, Reuters reported.

Japan’s Nikkei shed a staggering 13% to hit seven-month lows, a scale of losses not seen since the 2011 global financial crisis. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 4.2%.

The worryingly weak July payrolls report saw markets price in a 78% chance the US Federal Reserve will not only cut rates in September, but ease by a full 50 basis points.

“Sentiment was further dampened as the inflation rate in July could potentially be higher than the preceding month’s figure,” Ms. Alviar added.

A BusinessWorld poll of 15 analysts yielded a median estimate of 4% for the July consumer price index. This matched the lower end of the Bangko Sentral ng Pilipinas’ forecast.

If realized, July inflation would be faster than 3.7% in June but slower than 4.7% a year earlier.

The Philippine Statistics Authority will release July inflation data today (Aug. 6).

All sectoral indices closed lower on Monday. Industrials dropped by 3.52% or 323.61 points to 8,849.73; property declined by 3.34% or 86.39 points to 2,493.60; mining and oil went down by 2.64% or 221.73 points to 8,167.55; holding firms slumped by 2.44% or 140.63 points to 5,622.45; financials retreated by 2.21% or 44.56 points to 1,966.39; and services lost 1.29% or 25.99 points to end at 1,975.84.

Value turnover rose to PHP 5.64 billion on Monday with 638.56 million shares changing hands from the PHP 4.98 billion with 529.96 million issues traded on Friday.

Decliners overwhelmed advancers, 175 versus 34, while 45 names were unchanged.

Net foreign selling climbed to PHP 621.93 million on Monday from PHP 189.04 million on Friday. — R.M.D. Ochave with Reuters