LOCAL EQUITIES plunged to their lowest level in more than a year on Wednesday, falling alongside international markets amid political tensions in European Union (EU) and recent developments in the trade war between United States and China.
The bellwether Philippine Stock Exchange index (PSEi) dropped 1.73% or 132.22 points to 7,470.14, breaking the 7,500 support level it has established in the previous weeks.
This is the market’s lowest close since April 4, 2017, when the market finished at 7,446.49.
The broader all-shares index also shed 1.49% or 69.36 points to 4,571.31.
“I think investors are on a risk off mode as they digest a string of negative news from the west. The worsening political crisis in Italy is swaying investors away from risky assets as the populist party, Five Star Movement shows their exit plan from the EU,” Timson Securities, Inc. Equities trader Jervin S. De Celis said in a mobile phone message yesterday.
“This is causing so much uncertainty in the market because other EU members may also follow what the UK did,” he added.
At the same time, the US announced on Tuesday that it will be handing China a list of goods that will be slapped with tariffs on June 15. This dampened anew prospects of an easing of trade war between the two economies.
Aside from these political tensions, analysts also pointed to the rising US Treasury (UST) yields, which continued to affect the local market.
“Philippine stocks plummeted with the Italian debacle and the 10-year UST yield falling sharply to below 2.80% on a flight to safety,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a separate message.
Overseas, the Dow Jones Industrial Average dropped 1.58% or 391.64 points to 24,361.45, while the S&P 500 index also dipped 1.16% or 31.47 points to 2,689.86. The Nasdaq Composite index went down 0.5% or 7.26 points to 7,396.59.
Back home, the mining and oil sector was the lone sub-index that ended in positive territory, albeit with a minimal gain of 0.15% or 15.27 points to 9,745.01.
The financials sector led decliners, losing 2.56% or 48.68 points to 1,850.38. Property plummeted 1.66% or 63.02 points to 3,732.75.
Holding firms slumped 1.43% or 106.34 points to 7,316.01, while services also went down 1.32% or 19.76 points to 1,469.10. Industrials slipped 0.70% or 76.50 points to 10,814.04.
Net foreign selling swelled to P1.22 billion from the P169.14-million outflow posted in the previous session.
Value turnover climbed to P7.36 billion after 926 million issues switched hands. This is higher than the P6.11-billion turnover recorded on Tuesday.
Decliners trumped advancers, 132 to 56, while 49 names were unchanged.
After breaking through its support level of 7,500 on Wednesday, Regina Capital’s Mr. Limlingan predicts the main index could fall to as low as 7,200 in the coming days. — Arra B. Francia