The stock market goes down as the era of cheap money draws to a close
Stocks fell on Tuesday as investors grew concerned about the Federal Reserve’s plans to cut financial support measures and raise interest rates within months.
The Philippine Stock Exchange index, the benchmark of 30 companies, lost 54 points, or 0.8%, to close at 7,085.69 as all sub-sectors finished in the red.
The larger all-stock index fell 24 points, or 0.6%, to 3,775.46 on sales valued at 6.9 billion pesos. Losers outnumbered winners, 105 to 82, while 43 shows were unchanged.
Four of the 10 most active stocks ended in the green, led by Solar Philippines Nueva Ecija Corp. which climbed 3.1% to P1.33 and Globe Telecom Inc. which gained 1.9% to P3,300.00.
As the rapidly spreading variant of the Omicron coronavirus plays on your nerves, traders are now accepting the looming end of the pandemic era of ultra-cheap money, which has helped the economic recovery and stoked a global rally for nearly two years.
The pick-up in consumer activity, soaring wages, supply chain grunts and rising energy costs combine to push inflation in several countries to levels not seen in a generation, stepping up pressure on central bankers to act before it gets out of hand.
Several countries have already started to increase borrowing costs, but all eyes are on the U.S. Federal Reserve as it takes its first step, with commentators predicting it will happen in March, after completing its buying program. of bonds. That could be followed by two or three more by the end of the year, they say.
In remarks released ahead of his Senate confirmation hearing on Tuesday, boss Jerome Powell said the bank was ready to act.
“We will use our tools to support the economy and a strong labor market and to prevent higher inflation from taking hold,” said his opening statement.
“We can begin to see that the post-pandemic economy is likely to be different in some ways. The pursuit of our objectives will have to take these differences into account.
Data on Friday showed fewer jobs than expected were created in December, but there were many openings and wages have skyrocketed, suggesting further upward pressure on prices is likely.
Traders are now cautiously awaiting the release of US inflation figures on Wednesday, which could play a major role in the Fed’s thinking.
Jeffrey Halley of OANDA said: “With (the board’s) caution over the past two years, to the point of looking like a snail, I find it hard to see them press the panic button. right now.
“As such, I find it hard to plan for a March hike just as the Fed’s taper ends, although I don’t disagree with three hikes in all of 2022. I’m definitely in for it. disagree with four increases. As such, I think we may be nearing “peak Fed fear” at this time. “
The prospect of a rate hike shook the US markets at the start of the year. The Nasdaq is already down more than 4% as tech companies are more sensitive due to their reliance on debt to drive growth.
As the tech-heavy index edged higher on Monday, the S&P 500 and Dow closed in the red, although late lower buys helped them recover from the first large losses.
Asia also suffered, with Tokyo returning from a long weekend to end lower, while Hong Kong, Shanghai, Sydney, Wellington and Jakarta also slipped.
Singapore, Taipei, Mumbai and Bangkok rose while Seoul was flat.
“We think this market will eventually return to growth, but we still have wood to cut there; valuations have not been corrected, ”Lori Calvasina of RBC Capital Markets told Bloomberg Television.
“This is a revaluation. It’s painful, there is still a little way to go. With AFP