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Philippine stocks sank by more than 100 points Thursday after the Philippine Statistics Authority (PSA) reported that inflation rate picked up to a four-month high in September.
The 30-company Philippine Stock Exchange index fell by 119.60 points, or 1.9 percent, to close at 6,178.60, while the broader all-shares index declined by 49.81 points, or 1.47 percent, to settle at 3,348.75.
“The unexpectedly high September inflation print poured cold water on investor sentiment and sank the index to its slowest in over a week,” China Banking Corp. managing director Juan Paolo Colet said.
Inflation climbed to 6.1 percent in September from 5.3 percent in August on faster increases in the prices of food and non-alcoholic beverages. The figure is also higher than the median analyst estimate of 5.4 percent and the high end of Bangko Sentral ng Pilipinas’ guidance of 5.3 percent to 6.1 percent.
“This negative surprise brought selling pressure throughout the trading session and was in stark contrast to the positive performance of most Asian stock markets,” Colet said.
Meanwhile, Asian and European markets posted modest gains Thursday, rebounding from previous losses after a strong lead from Wall Street.
US markets finished Wednesday higher, snapping a three-day losing streak, with the tech-rich Nasdaq closing up 1.4 percent.
The Dow Jones Industrial Average and the S&P 500 also closed higher, while European indices ended little changed.
Positive sentiment continued in Asia, with Tokyo up by more than one percent at the close. Hong Kong ended only marginally up.
Singapore, Jakarta and Kuala Lumpur were also up. Markets in mainland China were closed for a week-long holiday.
“The US market saw gains driven by weak economic data, alleviating worries about prolonged elevated interest rates,” noted Stephen Innes, managing partner at SPI Asset Management.
“As a result, Asian markets responded with a risk-friendly bounce.”
The 10-year US Treasury note, which hit a 16-year peak on Tuesday, had retreated following a lackluster US hiring report from payroll firm ADP.
The note is a closely watched proxy for interest rates, and the recent surge comes amid fears the Federal Reserve will keep rates elevated for longer.
At the open, London, Frankfurt and Paris also crept up.
Michael Hewson, chief market analyst at CMC Markets UK, said the rises were expected to continue.
“This rebound in US markets has translated into a rebound in Asia markets and looks set to translate into a positive start for European markets this morning as we look ahead to the latest German trade import and export data for August, as well as French industrial and manufacturing production data, all of which are forecast to show weak economic performance for both,” he said.
The easing of Treasury yields was helped by economic data that prompted traders to scale back forecasts for Federal Reserve tightening this year.
All eyes will be on Friday’s release of employment figures, with the overall health of the economy factoring in Fed rate decisions.
“The US labor market is set to remain in the spotlight today,” Hewson added, “as well as tomorrow when we get the September non-farm payrolls report, which after yesterday’s slowdown in the ADP numbers, could set the seal on another rate hike in November, or keep markets guessing ahead of next week’s CPI report”. — Jenniffer B. Austria with AFP
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