By Arra B. Francia, Senior Reporter

LOCAL EQUITIES slipped Thursday as fears of a recession in the United States plagued sentiment both locally and overseas.

The bellwether Philippine Stock Exchange index (PSEi) dropped 0.37% or 29.79 points to close at 7,828.86 yesterday, although this was already a recovery from its fall to 7,624.20 intraday. The broader all-shares index likewise lost 0.47% or 22.57 points to 4,746.35.

“The inversion of the US Treasury bond yield curve last night sent western equities market off a cliff, incurring massive losses as the event has always been viewed as an early indicator that the economy maybe heading for a recession,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in an e-mail on Thursday.

“Asian markets followed suit; however, it did not sustain as big a hit as its western peers.”

US Treasury yields fell Wednesday due to weak economic data from China and Germany, further showing proof of the global economy’s slowdown on top of US-China trade war concerns.

The inversion of the 10-year treasury note yields versus the two-year notes is the first since June 2007, which analysts take as an indication of a possible economic downturn.

The PSEi outpaced the performance of international markets, which were most affected by the yield curve inversion.

The Dow Jones Industrial Average plummeted 3.05% or 800.49 points to 25,479.42. The S&P 500 index dropped 2.93% or 85.72 points to 2,840.60, while the Nasdaq Composite index tumbled 3.02% or 242.42 points to 7,773.94.

Asian indices were mixed, with Japan’s Nikkei 225 down by 1.21% or 249.48 points to 20,405.65. The Shanghai composite added 0.25% or 6.88 points to 2,815.80, while the Hang Seng index rose 0.62% or 157.73 points to 25,460.01.

“Despite today’s sharp recovery, it might be too soon to say if the index is out of the woods — especially since we already saw how the PSEi can react to US market movements,” Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said in an e-mail on Thursday.

Back home, the counter for holding firms was the lone winner as it climbed 0.63% or 48.42 points to 7,707.24.

The rest declined, led by mining and oil which plunged 1.91% or 157.70 points to 8,072.33. Services fell 1.23% or 19.60 points to 1,572.36; financials shed 1.12% or 20.57 points to 1,805.71; property retreated 1.1% or 45.06 points to 4,027.94; while industrials slumped 0.64% or 70.18 points to 10,858.12.

Turnover climbed to P11.81 billion after some 789 million issues switched hands, almost double the previous session’s P6.56 billion.

Decliners swamped advancers, 149 to 54, while 42 names were unchanged.

Foreign investors were net sellers for the eighth straight session, with net outflows swelling to P1.75 billion from Wednesday’s P959.09 million.