The stock market sank Thursday as investors opted to cash in on their gains after a three-day rally that sent the benchmark index past 6,500 points.
The Philippine Stock Exchange Index slumped 106.54 points, or 1.6 percent, to 6,545.17 on a value turnover of P5 billion. Losers beat gainers, 110 to 89, with 54 issues unchanged.
SM Investments Corp. of the Sy Group fell 3.3 percent to P965, while unit SM Prime Holdings Inc., the biggest mall operator, declined 3.4 percent to P35.60.
Metro Pacific Investments Corp., which is into toll roads, water and electricity distribution, hospitals and infrastructure, dropped 2.4 percent to P4.05, but Universal Robina Corp. of the Gokongwei Group, the largest snack food maker, rose 1.4 percent to P142.
The rest of Asian markets mostly rose Thursday with traders keeping tabs on the progress of US President Joe Biden’s huge infrastructure plan, while also taking heart from Federal Reserve meeting minutes reinforcing its intention to keep rates at record lows for an extended period.
Hong Kong, Sydney and Wellington all piled on more than one percent, while there were also gains in Shanghai, Seoul, Mumbai, Taipei, Jakarta and Bangkok, though Tokyo and Singapore fell.
The broad gains came after yet another record for the S&P 500 on Wall Street, helped by a general mood of optimism that the world economy is on course for a strong recovery as vaccines are rolled out.
Biden was out Wednesday pushing his $2.25-trillion roads-and-bridges plans, warning it was a make-or-break moment to ensure the United States “can lead the world as it has historically done.”
The prospect of another giant spending splurge, coming soon after the passage of his $1.9-trillion stimulus, has added to expectations the country is on course for blockbuster growth.
However, analysts said the president faced a battle to get an agreement on the plan, which calls for a hike in corporate taxes to pay for it, with even some Democrats opposed to a big rise.
While his party will only need a simple majority to get it through the Senate, “there is no guarantee this latest fiscal proposal can get up without either being softened in terms of the proposed tax rises and/or without some Republican support,” said National Australia Bank’s Ray Attrill.
Investors are also keenly watching developments as Treasury Secretary Janet Yellen pushes for a global corporate tax on wealthy firms that have done well during the pandemic in order to finance recovery efforts.
The idea has the support of the International Monetary Fund, while G20 finance ministers said they would continue work on a minimum rate as they look to undermine the use of tax havens, with a deal possible by July.
For now, traders are happy to ride the rally as coronavirus vaccination programs progress, allowing economies to gradually reopen—even if a little slower in some areas than others.
“The short-term momentum appears to remain in favor of the bulls as investors seem happy and willing to bet on an economic rebound over the coming months in light of the robust data in recent weeks,” said Axi strategist Stephen Innes. With AFP
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