Stocks sank Thursday on a government report that the inflation rate in June surged to 5.2 percent, higher than the market consensus of 4.8 percent and above the target of 4.3 percent by the Bangko Sentral ng Pilipinas.
The Philippine Stock Exchange Index plunged 114.85 points, or 1.6 percent, to 7,233.57 on a value turnover of P5.2 billion. Losers beat gainers, 113 to 75, with 60 issues unchanged.
Rising inflation will slow down consumption and affect the bottom line of companies. It could also lead to further rate increases from the Bangko Sentral, which in turn will raise the cost of production.
SM Investments Corp. of retail tycoon Henry Sy Sr., the biggest mall operator declined 3.8 percent to P890, while Jollibee Foods Corp., the largest fastfood chain, fell 2.2 percent to P254.
Universal Robina Corp., the biggest snack food maker, dropped 2.6 percent to P121.50, while Metropolitan Bank & Trust Co., the second-largest lender in terms of assets, lost 3.8 percent to P71.75.
The rest of Asian stocks fell Thursday as investors fretted over US-China tariffs due to kick in within hours and which threaten to plunge the world’s top two economies into an all-out trade war.
The US is set to begin enforcing tariffs on more than $34 billion in Chinese imports from Friday.
Beijing has vowed to respond with its own tariffs immediately, arguing it has “no choice but to fight” and accusing Washington of “opening fire on the whole world” with the trade restrictions.
But Washington has threatened to introduce even steeper US counter-measures, potentially covering another $400 billion in Chinese goods, if Beijing retaliates.
With a public holiday in US meaning no lead from Wall Street for anxious traders to follow, and amid ongoing concerns about the slowing Chinese economy, all eyes were on the looming tariff deadline and fears of escalation.
Hong Kong shares fell 0.2 percent, while Shanghai stocks closed at a two-year low after shedding 0.9 percent.
The yuan lost ground against the dollar despite central bank chief Yi Gang’s pledge earlier this week to keep the exchange rate stable and avoid using the currency as a weapon in any trade war.
Elsewhere, Tokyo slipped 0.8 per cent, while Seoul, Taipei and Bangkok also posted losses.
Washington describes its tariffs as retribution for Beijing’s theft of American technology and other unfair trade practices.
Greg McKenna, chief market strategist at AxiTrader, said “there has been a subtle but distinct shift in the number of voices who are now saying this could all end up in a big global mess with a huge hit to global growth.”
Traders may have underestimated the resolve of the US administration to pursue President Donald Trump’s protectionist agenda, he said.
Energy and financial stocks were among the biggest losers in Asia. Shares in HKICIM–the Hong Kong-listed subsidiary of Chinese conglomerate HNA Group whose co-founder died after falling off a wall in France Tuesday—fell 3.7 percent.
Investors are also watching for key data from the US including payroll figures and Federal Reserve meeting minutes later this week. With AFP