THE main index gave up its gains on Friday and settled at the 5,500 level, as increasing tensions between the United States and China pushed investors away from the local bourse.

The 30-member Philippine Stock Exchange index (PSEi) erased 112.75 points or 1.99% to close at 5,541.95 on Friday. The broader all shares index shed 52.04 points or 1.52% to 3,356.61.

“The market shed almost 2% today as investors reacted to the implications resulting from the latest developments in the US-China telenovela,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

“This time, the US extended sanctions on Huawei on top of it blaming China for the pandemic, which in turn caused worries that another cycle of retaliatory actions will worsen an already weakened global economy,” he said.

US President Donald Trump further stretched the country’s already brittle relationship with China as he said he was looking at cutting off relations with the Asian economic giant.

In an interview with Fox Business on Thursday, the American president said he doesn’t want to talk to Chinese President Xi Jinping as he blames the country for supposedly mishandling the coronavirus disease 2019 (COVID-19) pandemic.

The US has been the epicenter of the COVID-19 pandemic since March, which now has 1.4 million cases and more than 85,900 deaths due to the virus. US Federal Reserve Chair Jerome Powell said earlier that the economic toll of the pandemic to the country is seen to last for an extended period, which has already seen a historic job loss of more than 20 million in April.

In the Philippines, gross domestic product (GDP) hit a snag in the first quarter as the economy contracted 0.2% for the first time since 1998. The government expects GDP to fall as much as 3.2% this year as the COVID-19 pandemic lingers.

“Looking at the charts, the market has been consolidating in a tight range between 5,500 and 5,680 for May and could be indicative that investors have already priced in gloomy results for 2Q (second quarter) 2020,” Mr. Lisbona said.

“Our more pragmatic clients have actually written off 2020 altogether, with some opting to observe and react to developments as the country eases out of quarantine into a new normal,” he added.

Sectoral indices at the PSE were mostly in red territory on Friday. Property shaved off 94.15 points or 3.23% to 2,815.65; holding firms removed 116.19 points or 2.09% to 5,437.09; financials dropped 22.06 points or 1.91% to 1,129.40; mining and oil fell 45.07 points or 0.99% to 4,505.48; and industrials slid 63.51 points or 0.83% to 7,506.67.

The services index was the sole gainer with an increase of 2.32 points or 0.17% to 1,314.04 at the end of trading.

Volume on Friday was thinner at 660.43 million issues from 1 billion the previous session, but value turnover grew to P4.53 billion from P3.77 billion.

Decliners outnumbered advancers, 103 against 70, while 46 names ended unchanged.

Net foreign selling rose to P654.56 million from P367.02 million a day ago, marking the eight day offshore investors exited the local bourse. — Denise A. Valdez