Most Southeast Asian stock markets slipped yesterday, tracking Wall Street as a surprise rate cut by the US Federal Reserve failed to allay fears over the coronavirus’s impact, while dismal China economic data dented sentiment as well.
But local share prices ended higher with the Philippine Stock Exchange index (PSEi) gaining 76.72 points to close at 6,867.26, a 1.13 percent hike.
The broader all shares index also closed higher, adding 26.81 points to close at 4,089.06.
Losers edged gainers 123 to 74 with 37 stocks unchanged. Trading turnover reached P6.08 billion.
The peso closed at P50.551 to the dollar, up from P50.69 on Tuesday. It opened at P50.68, hitting a high of P50.54 and a low of P50.73. Trading turnover reached $1.19 billion.
Luis Limlingan, managing director at Regina Capital Development Corp., said the market’s hike was in the back of treasury yields falling to “historic lows” after “a surprise inter-meeting interest-rate cut from the Federal Reserve to restore confidence in a market that has been rocked by worries about the spread of coronavirus world-wide.”
Yesterday’s volatile trading session, got a boost from the US Fed’s decision to lower its benchmark rate by 0.5 percent in an emergency move aimed at stemming the economic impact of the coronavirus.
Limlingan said this is the first time the US Fed acted in between meetings since the 2008 financial crisis.
“Chairman Jerome Powell cited ‘new risks to the economic outlook’ but declined to signal whether more reductions were in the cards, even as investors now price in roughly another 50 basis points in cuts by year-end. President Trump promptly demanded ‘more easing and cutting.’ In response to the move, the 10-year Treasury note rate sank below 1 percent for the first time ever,” Limlingan said.
The Fed lowered interest rates by 50 basis points on Tuesday, its first out of cycle cut since 2008 at the height of the financial crisis, in a bid to shield the world’s largest economy from the impact of the virus.
The cut sent Wall Street sharply lower as investors worried about whether putting more money in the economy would help disrupted supply chains and weak consumer confidence.
Further hurting sentiment, data showed China’s services sector had its worst month on record in February as new orders plummeted to their lowest since the global financial crisis.
Financials in Singapore and Thailand were the worst hit after Fitch Ratings on Tuesday said banks in tourism-dependent Thailand and China-exposed Singapore would be the most affected in the region amid the virus outbreak.
Thai stocks fell more than 1.2 percent after the previous session’s sharp gain, with Bangkok Bank Pcl and Bank of Ayudhya Pcl shedding more than 1 percent each.
Singapore shares declined as much as 0.6 percent, dragged by top lenders including United Overseas Bank Ltd and DBS Group Holdings Ltd.
Meanwhile, Indonesian equities gained as much as 2 percent to hit their highest since Feb. 27, on expectation of a second policy package to help repair supply chains that have been disrupted by the spread of the virus.
Malaysian shares climbed nearly 0.5 percent, helped by financial and telecom stocks.
Data showed January exports dropped 1.5 percent from a year earlier, marginally better than the 1.6 percent fall forecast by analysts surveyed in a Reuters poll. — Ruelle Albert Castro, Reuters
