Stocks bounced back Wednesday on bargain hunting after investors were spooked by the move of Fitch Ratings the other day to revise its credit rating outlook on the Philippines to negative from stable after keeping the investment grade score of “BBB.”
The Philippine Stock Exchange Index rose 40.28 points, or 0.6 percent, to 6,835.41 on a value turnover of P4.4 billion. Losers, however, beat gainers, 117 to 70, with 58 issues unchanged.
SM Investments Corp. of the Sy Group climbed 2 percent to P1,010, while Metropolitan Bank & Trust Co., the second-biggest lender in terms of assets, added 1.9 percent to P49.
GMA Network Inc., the biggest broadcasting firm, however, slumped 4.6 percent to P12.88, while LT Group Inc. of airline and tobacco tycoon Lucio Tan fell 3.9 percent to P11.
The rest of Asian markets fell on Wednesday as a surprise surge in US inflation raised investor concerns over the direction of Federal Reserve policy.
They took their cue from Wall Street, where stocks retreated from records after data showed the biggest jump in US inflation in more than a decade.
The consumer price index spiked a higher-than-expected 5.4 percent in the 12 months ended in June, not seasonally adjusted, the highest rate since August 2008.
The US central bank has said repeatedly that stiff increases in consumer prices will be transitory but investors will be keenly waiting to hear from Fed Chair Jerome Powell, who will testify to Congress on Wednesday and Thursday.
Powell likely will find himself defending the Fed’s pledge to continue providing stimulus to the US economy until there has been substantial progress on lowering unemployment and getting inflation to hold above two percent.
“The key question for the Fed and markets, in general, is whether the sustained lift in inflation seen over the past couple of months is still likely to be transitory, or will it be more persistent, warranting an earlier normalization in Fed policy,” senior economist Tapas Strickland of National Australia Bank said in a note.
All three main US indexes closed lower following the inflation data, with the Dow slipping 0.3 percent.
Asian markets followed Wall Street’s lead, with Tokyo closing 0.4 percent lower while Shanghai retreated 1.1 percent and Hong Kong fell 0.6 percent.
Among other Asian markets, Singapore, Bangkok, Jakarta, and Seoul also saw losses while Taipei was flat.
“Nowhere is probably going to be more nervous that the Fed finally blinks than Asia,” said OANDA’s Jeffrey Halley.
“With much of the region from Australia to Japan down the COVID-19 rabbit hole, emerging Asia, in particular, is in no position to tighten monetary policy to maintain those soft US dollar pegs if the US monetary policy direction starts diverging from the still ultra-soft one across Asia.”
Wellington fell 0.5 percent after New Zealand’s central bank said it would ease its stimulus, ending its bond-buying program on July 23. The New Zealand dollar jumped 0.5 percent on the surprise move. With AFP