Markets drop as traders fret over another Fed hike

MANILA, Philippines — Stock markets mostly fell yesterday on renewed concerns that the US Federal Reserve will hike rates again, while another weak batch of trade data compounded worries about the struggling Chinese economy.

The positive sentiment that fuelled a rally through much of July has given way to nervousness that while US inflation is coming down, officials will keep tightening monetary policy to make sure they have prices under control.

Hong Kong and Shanghai dropped along with Seoul, Wellington, Taipei, Jakarta, Mumbai and Bangkok.

London, Paris and Frankfurt joined the market selloff.

Manila was also down with the main index Philippine Stock Exchange Composite index closing 34.81 points lower at 6,472.97.  Likewise, the broader All Shares index retreated by 12.81 points or 0.37 percent to close 3,461.11

The sectoral gauges were mostly down except for services and industrial. On the other hand, holding firms, financials, property and mining & oil ended in the red.

Claire Alviar of Philstocks Financials said the Philippine bourse dropped as investors await some key economic data to be released this week.

“Investors are waiting for the US’ July inflation rate and the Philippines’ GDP growth for the second quarter. In China, it saw a 14.5 percent year-on-year drop in exports while imports also dropped by 12.4 percent year-on-year, which are both worse than the expectated. This brought negative sentiment especially to the Philippines as China is one of our top trading partners,” she said.

Total value turnover was thin at P4.579 billion. Market breadth was negative with 91 losers and 72 gainers while 66 issues were unchanged.

Meanwhile, analysts warned that while the US economy remained in rude health after more than a year of tightening, there were still recession fears.

“There is no way the Fed can do the level of tightening that it’s done so aggressively and not have some damage,” Kristina Hooper, of Invesco, told Bloomberg Television.

“That’s why I believe it’s going to be a bumpy landing.”

Wall Street’s three main indexes enjoyed a strong start to the week, with focus turning to the release of consumer price inflation due later in the week. A mixed jobs report on Friday left investors with little to gauge the Fed’s next move.