Stocks down slightly; FLI climbs

The stock market declined slightly Wednesday after top US Federal Reserve officials dented hopes for a big interest rate cut.

The Philippine Stock Exchange Index lost 20.52 points, or 0.3 percent, to 8,013.57 on a value turnover of P8.1 billion. Losers beat gainers, 108 to 86, with 56 issues unchanged.

Universal Robina Corp., the biggest snack food maker, fell 1.6 percent to P174.50, while SM Investments Corp. of the Ty Group slipped 1 percent to P950. 

Filinvest Land Inc. of the Gotianun Group surged 8.7 percent to P1.87, while Globe Telecom Inc., the second-largest telecommunications firm, rose 2.7 percent to P2,260.

The dollar, meanwhile, rose Wednesday while gold and most Asian equities fell. Traders are also fretting over this week’s meeting between Donald Trump and Xi Jinping.

Adding to the downward pressure were concerns about worsening tensions between the US and Iran, although a drop in US stockpiles boosted oil prices.

Global markets had been on a healthy rally for more than a week after Trump hailed phone talks with his Chinese counterpart and said they would meet to discuss their trade war on the sidelines of the G20 summit in Osaka.

That coincided with a dovish lean from the US central bank that raised expectations that it would soon announce its first rate reduction in more than a decade.

However, optimism took a hit Tuesday after Fed boss Jerome Powell warned about the outlook for the US economy but said policymakers would not “overreact” to recent data.  

Also Tuesday, St Louis Fed president James Bullard, considered a key dove on the board, told Bloomberg a cut of 50 basis points—which many investors had been hoping for—would be excessive.

The remarks hit equities, with Wall Street’s three main indexes closing sharply lower, while the dollar—which has come under heavy pressure of late—bounced back against its major peers and other higher-yielding but riskier currencies.

Tokyo ended 0.5 percent lower, Shanghai fell 0.2 percent, Sydney slipped 0.3 percent and Singapore was off 0.1 percent, with Wellington, Taipei and Bangkok also down.

However, Hong Kong eked out small gains in the afternoon, as did Jakarta and Mumbai.

“Bullard... dashed the hopes of many investors who were expecting the Fed to kick-start this easing cycle with a bang,” said Edward Moya, senior market analyst at OANDA.

“With the most dovish member taking a 50-basis point cut off the table, the dollar surged as equities tumbled.”

The weaker dollar put a cap on gold’s rally, with the metal’s safe haven status in times of turmoil unable to stop it retreating from six-year highs.

Investors are keeping their focus on the planned meeting between Trump and Xi in Japan, although the US side dampened expectations for a deal between the two, saying the talks would set out a path for an agreement.

However, officials did say they were willing to hold off hiking tariffs on more Chinese goods, Bloomberg News reported.  

Still, observers expect the issue to continue for some time. With AFP

Topics: Stock Market , Philippine Stock Exchange Index , Philippine Stock Exchange , PSE , PSEi , Filinvest Land Inc.
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