MANILA - Philippine share prices drifted lower on Tuesday in light trading, as investors focused on renewed concerns over the US debt ceiling and the future direction of its monetary policy.
At the Philippine Stock Exchange, the benchmark index fell 16.56 points or 0.26 percent to close at 6,461.38. Except for the marginal gain of the financial counter, the other sub-indices finished in negative territory, with the property, industrial and service sectors losing at least 0.50 percent each.
Decliners outnumbered advancers, 83 to 56, while 43 issues were unchanged. A total of 670.52 million stocks worth P6.62 billion changed hands.
Most actively traded stocks were Alliance Global, PLDT, Universal Robina, LT Group and BPI. The biggest gainers were Millennium Global, AgriNurture and E-Game, while the biggest losers were Mabuhay Vinyl, Vitarich and Solid Group.
"The US remains among the top source of new jitters this time revolving around the debates on the debt ceiling," said Jun Calaycay of Accord Capital Equities Corp.
The US Treasury may hit its borrowing limit by mid-October. The cap must be raised to prevent the world's largest economy from defaulting on its debt.
This not the first time that the US government is faced with this problem. It happened three years ago and again in late 2012, causing a massive selloff in global markets.
"President [Barack] Obama has indicated earlier that he will not 'negotiate' on the issue against hardline Republicans. This puts in peril the creation of a much needed additional federal government borrowing space – a scenario that could lead to a shutdown and a debt default," Calaycay said.
Overnight, the Dow Jones industrial average shed 49.71 points or 0.32 percent to close at 15,401.38 as investors weighed the next move of the US central bank on its monetary stimulus.
"It’s a mix of extending the duration of the stimulus, to shifting focus to priming the real economy and to outright tapering – running the whole gamut of all possible policy alternatives and leaving investors clueless," said Calaycay.
In its last policy meeting, the Federal Open Market Committee (FOMC) decided to postpone the tapering of its $85-billion bond-buying program, a huge driver of stock market rallies in the past.
William Dudley, president of the Federal Reserve Bank of New York, said the current pace of economic growth is not strong enough to withstand the reduction of the US central bank's asset purchases.
This statement came on the heels of conflicting statements of FOMC members signaling the central bank could start reducing stimulus next month, while another criticized the decision not to taper in September.
"Except for the ongoing crisis in three barangays of Zamboanga City and the seemingly diminishing steam of the pork barrel saga, there is very little investors can actually move and act on from the domestic front – except the oncoming end-of-quarter window dressing – from which hopes of a short-term positive action springs," Calaycay said.
source: interaksyon.com
