Stock market down anew as US-China tensions rise

Benchmark PSEi touches 7,200, closes 1.37% down at 7,312.61
The stock market plunged to an over one-year low on Tuesday, touching the 7,200 level at one point as escalating trade tensions between the world’s two largest economies further dampened investor sentiment.

News that US President Donald Trump was threatening to impose fresh tariffs on Chinese imports led to sell-offs in Europe and Asia with the benchmark Philippine Stock Exchange index (PSEi) plunging to an intraday low of 7,253.12 in morning trade.

The market — now down over 14 percent since the start of the year — clawed back some of the losses, ending Tuesday down 101.50 points or 1.37 percent at 7,312.61 — its lowest close since the 7,311.72 recorded on March 31 last year.

The wider All Shares, meanwhile, declined 1.09 percent or 49.33 points to finish at 4,481.71.

China Bank Securities Corp. research director Garie Ouano pointed to the likelihood of a full-blown trade war between the United States and China, which IB Gimenez Securities, Inc. research head Joylin Telagen also said was now “the biggest risk … [to]the global economy’s growth”.

Trump on Monday warned that the US could target up to $450 billion in Chinese imports after Beijing retaliated with a like-for-like response to Washington’s decision last Friday to impose duties on $50 billion worth of Chinese goods.

China accused Trump of “blackmail” following the latest threat and said it would “have no choice but to take … strong, powerful countermeasures.”

Hong Kong fell by 2.8 percent, Tokyo by 1.8 percent and Shanghai by 3.8 percent. European markets also fell in early morning trade.

Analysts said the outcome of Thursday’s Monetary Board (MB) meeting was also weighing on investor sentiment given concerns over inflation, the US Federal Reserve’s aggressive tightening and the peso’s continued weakness.

“The Philippines continued to face more headwinds than other regions. This was because analysts are torn on the outcome of the Bangko Sentral ng Pilipinas (BSP) meeting,” Regina Capital Development Corp. Managing Director Luis Limlingan said.

“Many are debating whether the BSP will leave policy rates unchanged, keeping the overnight reverse repository rate at 3.25 percent and the overnight deposit rate at 2.75 percent. This is because overall inflation has been creeping up, driven mostly by supply side factors and the Train (Tax Reform for Acceleration and Inclusion) law,” he added.

Papa Securities Corp. trader Gio Perez also blamed Tuesday’s sell-off to uncertainty surrounding the MB’s likely decision.

“To note, a rate hike by the Monetary Board will stem further peso depreciation which may lead to some positivity for the stock market,” Perez said.

The currency, which breached the P53:$1 level last week, gained four centavos on Tuesday to close at P53.44 against the dollar.

At the stock market, all sectoral indices were in the red with holding firms down the most by 1.74 percent.

More than 909 million issues valued P6.89 billion changed hands.

Decliners outnumbered advancers, 125 to 70, while 47 issues were unchanged.


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