Shares drop as market gropes for leads to Trump’s policies

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Share prices dropped further Tuesday as market players waited for more clues on how US President Donald Trump’s trade and economic policies would pan out after he took his oath of office the day before.

Trump refrained from imposing tariffs on his first day in office but signaled potential policy moves in the coming days, giving Asian currencies the impetus to trade higher.

Trump had been quoted by foreign news agencies as saying his team was thinking of tariffs around 25 percent on Canada and Mexico, which could be announced on Feb. 1. The comments came as a surprise given officials had earlier signaled any new taxes would be imposed in a “measured” way, according to a report from Reuters.

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The Philippine Stock Exchange index (PSEi) eased 9.68 points or 0.15 percent to 6,340.21.

The broader All Shares index edged lower by 2.62 points or 0.07 percent to 3,700.24.

Decliners outpaced gainers 104 to 76 with 59 stocks closing unchanged. Trading turnover reached P3.87 billion.

Investors are still groping for concrete leads regarding Trump’s economic policies as the market has yet to price in the economic impact of his administration’s policies, said Alfred Garcia, AP Securities Inc. head of equity research.

This can be gleaned from the thin trading for the day, suggesting many investors opted to stay on the sidelines in the meantime, said.

Those who decided to take risks are realigning their expectations on the Philippine economy, Garcia added.

The peso closed at 58.49 to the dollar, up from 58.52 on Monday. The currency opened at 58.333, hitting a high of 58.33 and a low of 58.50. Trading turnover reached $1.6 billion.

As market players cheered the possibility of a delay in tariff implementation following a brief mention of the topic in Trump’s speech, the US president said he was mulling imposing 25 percent tariffs on Mexico and Canada as soon as Feb. 1.

That sent the Mexican peso tumbling 1.5 percent, while a lack of clarity on immediate tariffs on China supported Asian currencies despite investors remaining wary.

Trump’s inaugural policies suggested he will negotiate rather than immediately impose hefty tariffs on trading partners.

“The developments suggest that Trump is indeed serious about raising tariffs, but will take a more considered approach to them,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

“The delay should thereby power a further near-term pullback in the US dollar,” he added.

The ringgit rose 0.3 percent to its strongest level in nearly three weeks ahead of Bank Negara Malaysia’s (BNM) monetary policy decision on Wednesday. Markets expect the central bank to keep interest rates unchanged at 3.00 percent.

While the Malaysian economy is expected to post strong growth of 5.1 percent last year, inflation – 1.8 percent in November – has remained largely subdued, suggesting BNM will be in no rush to cut rates as it aims to avoid further weakening of the ringgit.

The yuan were largely flat.

Singapore’s dollar declined about 0.2 percent. The Monetary Authority of Singapore (MAS) will announce its first policy decision of 2025 later this week.

Economists are split on whether the central bank will loosen monetary policy this week or leave its settings unchanged to see the impact of policies introduced by the new US president in his second term.

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At the World Economic Forum in Davos, Switzerland meanwhile, Finance Secretary Ralph Recto said interest rate cuts by the Bangko Sentral ng Pilipinas may be fewer and more spaced out in 2025 compared to last year due to geopolitical tensions and US policy uncertainties.

The Bangko Sentral cut borrowing costs in December for the third straight meeting.

Stockbroker Philstocks Financial Inc. said investors continue to be concerned about the specifics of Trump’s planned protectionist foreign trade policies. 

Most actively traded BDO Unibank Inc. dropped P2.20 to P144. International Container Terminal Services Inc. decreased by P6 to P390. Universal Robina Corp. fell P2.80 to P66. SM Investments Corp. rose P7 to P837. Metropolitan Bank and Trust Co. gained P0.30 to P71.50. Converge ICT Solutions Inc. increased P0.46 to P18. Ayala Land Inc. climbed P0.25 to P25.50. Bank of the Philippine Islands slid P0.20 to P122.50. Globe Telecom Inc. declined by P12 to P2,278. China Banking Corp. advanced by P1 to P70.05. (With additional report from Reuters)

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