Tuesday, July 5

Philippine peso firms after rate hike, Asian stocks fall on growth fears


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The Philippine peso firmed on Thursday

after its central bank raised rates for the first time in more

than three years, while Asian shares tumbled on concerns around

surging inflation, its impact on retail demand, and the threat

of a recession.

Stocks in Manila fell 1%, while the Philippine peso

edged up 0.2%. The Philippine central bank raised its

benchmark interest rate by 25 basis points, as expected, to

address rising inflationary pressures.

“With the recovery in hand and price pressures surging,

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Bangko Sentral ng Pilipinas (BSP) finally decided to join the

rate-hike club… The bigger development was the quick walk-back

of pandemic support with BSP closing the provisional advance and

tweaking the bond purchase window,” said Nicholas Antonio Mapa,

senior economist at ING.

Equities in the region also tracked weakness on Wall Street

overnight as retail giant Target Corp warning of a

bigger margin hit due to rising fuel and freight costs, and

Walmart Inc flagging a similar squeeze.

It was the worst one-day loss for the S&P 500 and Dow Jones

Industrial Average since June 2020.

“The focus has now shifted towards concerns about US

growth as the Fed tightening is well understood and well priced

in,” said Khoon Goh, head of Asia research at ANZ.

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“The market is now concerned that the US economy might be

slowing a lot faster than anticipated, particularly given the

negative earnings reports coming up from retail companies

overnight,” said Goh.

Shares in India and Taiwan led losses for

Asian markets, falling more than 2% each.

Regional currencies weakened too, even as the US dollar

eased. Risk sentiment remained fragile after US Federal

Reserve Chair Jerome Powell ratcheted up the hawkish rhetoric.

South Korean shares fell more than 1% while the won

lead losses among regional currencies, skidding 0.9%.

The Indonesian rupiah, down more than 2.5% since the

country announced plans in April to ban exports of palm oil,

fell 0.3%.

Long-tenor bonds in Singapore, seen as a

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safe-haven bet, saw yields slip 45 basis points to 2.715%.

HIGHLIGHTS:

** In the Philippines, top index losers are SM Investments

Corp down 3.45% at 840 pesos; International Container

Terminal Services Inc down 1.93% at 213.6 pesos

** Thailand’s central bank said it has no need to raise

interest rates following the Fed’s hikes as domestic factors and

its economic recovery will be the main issues when deciding

policy

Asia stock indexes and

currencies at 0736 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.09 -10.1 <.n2>

China EC>

India -0.15 -4.34 <.ns ei>

Indonesi -0.31 -3.26 <.jk a se>

Malaysia -0.26 -5.47 <.kl se>

Philippi +0.13 -2.65 <.ps nes i>

S.Korea 11>

Singapore +0.22 -2.87 <.st e i>

Taiwan -0.17 -6.96 <.tw ii>

Thailand +0.07 -3.57 <.se ti>

(Reporting by Riya Sharma in Bengaluru; editing by Uttaresh.V)

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