LOCAL SHARES may edge lower in the remainder of the week due to lingering recession fears and concerns over the United States-China trade war.
The benchmark Philippine Stock Exchange index (PSEi) dropped 0.64% or 51.44 points to close at 7,886.91.
So far, the main index is up 1.17% for the week compared to its 7,795.98 close last Friday. Foreign investors logged net sales of P534.4 million in the past two days.
“Overall, the market is still clouded with uncertainty. Most of our narratives today are in favor of the negative from the US-China trade war, to consequently, the recession fears on major economies abroad,” Philstocks Financial, Inc. Research Associate Japhet Louis Tantiangco said in a text message.
“Given such, we see a downward bias for the local market for the rest of the week.”
Trade negotiations between US and China remain stalled. On Tuesday, US Commerce Secretary Wilbur Ross announced Washington’s decision to grant Chinese tech giant Huawei Technologies Co., Ltd. a 90-day trade extension. The temporary reprieve gives US firms more time to pivot away from Huawei products.
This came amid US President Donald J. Trump’s statement that he does not want to do business with the company, claiming it is a national security threat.
Meanwhile, Mr. Trump said on Tuesday his administration was considering potential tax cuts on wages as well as profits from asset sales, and sought to play down market anxieties that the world’s top economy could be heading for a recession.
Recession fears were stoked last week when bond investors briefly demanded a higher interest rate on 2-year Treasury bonds than for 10-year Treasury bonds, a potential signal of lost faith in near-term economic growth.
Mr. Trump dismissed fears of a slowdown, extolling low unemployment and a rising stock market over his tenure.
Meanwhile, Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said the market may take cues from US markets.
“With the holiday and a lack of clear catalysts for the rest of the week, movement for Thursday and Friday should be influenced by US markets,” Mr. Perez said in an e-mail.
Wall Street indices were down on Tuesday as investors placed their funds on less risky assets on fears of the US recession and how the US Federal Reserve plans to go about monetary policy.
The Dow Jones Industrial Average shed 0.66% or 173.35 points to 25,962.44. The S&P 500 index slumped 0.79% or 23.14 points to 2,900.51, while the Nasdaq Composite retreated 0.68% or 54.25 points to 7,948.56.
Fed Chairman Jerome Powell is scheduled to speak at the central bank’s annual conference in Jackson Hole, Wyoming this Friday. Ahead of his speech, Federal Reserve Bank of San Francisco President Mary Daly said she sees “solid domestic momentum that points to a continued economic expansion.” — Arra B. Francia with Reuters