Stocks sink anew as recession fears resurface

MANILA, Philippines — Investors continued to take profit from the stock market’s recent rally as the main index slipped anew yesterday back to the 6,400 territory.

The benchmark Philippine Stock Exchange index (PSEi) closed at a seven–day low 6,489.65, down by a hefty 245.34 points or 3.64 percent, while the broader All Shares index fell by 81.38 points or 2.32 percent to 3,419.65.

Total value turnover, meanwhile, reached P6.322 billion. Market breadth was negative, 108 to 75, while 56 issues were unchanged.

Claire Alviar of Philstocks Financial said that the PSEi plunged along with its Asian peers “as investors await US payrolls data that could affect the Fed’s decision.”

“At home, investors also booked gains while waiting for the inflation data in November,” she said.

The PSEi emerged as the top loser across Asia, on track for its worst week in nine, as prospects of further monetary tightening sapped risk sentiment.

Analysts at Barclays expect “significant monetary policy tightening” to hurt growth next year with a lag, forecasting a 4.5 percent growth in 2023, down from 6.6 percent seen this year as inflationary pressures and macro headwinds bite.

Separately, the Philippines’ central bank governor voiced caution over the transparency of a potential sovereign wealth fund, which will serve as another source of liquidity for development projects and expected to be overseen by President Marcos Jr.

Other markets in Europe and Asia also retreated yesterday ahead of the release of US jobs data.

Optimism over moves by China to ease strict pandemic controls appeared to have faded, replaced by worries over indications recession may be looming.

Action was muted as traders awaited a closely watched monthly report on jobs due out Friday that will show how the labor market is holding up, which may influence what the Fed does next in its bid to cool inflation.

A moderate reading might improve buying sentiment, said Ipek Ozkardeskaya of Live.com, given that “investors are dying to price in the goldilocks scenario, which is the sweet combination of slowing inflation, but a mild economic slowdown, which means mild deterioration in the US jobs data.”