Index falls below 4,000 as stocks take drubbing

MANILA, Philippines – The local stock market plunged yesterday in a massive selloff triggered by lingering fears over a potentially massive debt crisis in Ireland as well as heightened tensions between North and South Korea.

The PSE Index (PSEi) fell nearly 100 points or 2.46 percent to close at 3,953.70, shedding a hefty 7.38 percent in gains for the month of November.

US and Asian markets likewise slumped with Japan’s Nikkei falling 188.95 points to 9,937.04 and Hong Kong’s Hang Seng dropping 158.23 points to 23,007.99.

Australia’s S&P index slid 0.6 percent to 4,593.9 and China’s Shanghai Composite Index lost 2.4 percent to 2,798.73.

More than 1.45 billion shares valued at P8.41 billion changed hands.

Market breadth was negative with losers outnumbering gainers, 100 to 36. There were 29 issues that were unchanged.     

The SM group led today’s big drop as its listed flagship holding firm SM Investments Corp. wiped out its gains to close in negative territory.

Over the weekend, the European Union and International Monetary Fund (IMF) have agreed to provide 85 billion euros in bail-out funds to troubled Ireland.

“This failed to assuage fears of the contagion spreading, with keen eyes now trained towards Portugal and Spain,” said Accord Capital Equities Inc.’s Jun Calaycay.

Belle Corp. rose 1.52 percent yesterday to P3.35 on talks it is set to clinch a deal with a Macau-based casino operator for its planned multi-billion peso entertainment complex along Roxas Bouleverad.

Global markets tumbled as investors continued to fret about the Europe’s debt crisis.

Investors likewise remained cautious ahead of a string of economic data due out of the US this week. These include third-quarter productivity data, US employment data and manufacturing index for November. Vehicle and retail sales figures for November will also be released.

Meanwhile, Oil prices rose Monday after the European Union agreed on a bailout plan for Ireland, which offset some concern that a financial crisis could surface in Portugal and Spain.

The gain came even as the dollar was stronger against other currencies. Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use foreign currencies.

Benchmark crude for January delivery rose $1.97 to settle at $85.73 a barrel on the New York Mercantile Exchange.

The dollar soared against the euro. In late trading in New York, the euro dropped to $1.3116 from $1.3237 late on Friday. It had earlier fallen below $1.31 for the first time since Sept. 21.

The EU agreed Sunday to give Ireland euro67.5 billion ($89.4 billion) in loans and outlined new rules for future emergencies in an effort to restore faith in the euro.

“The EU rescue package for the Republic of Ireland ... is helping risk appetite to rise and boosting investor demand for commodities,” said a report from analysts at Commerzbank in Frankfurt.

Still, with worries remaining about the financial crisis affecting other EU countries like Portugal or Spain and continuing tensions between North and South Korea, investors could soon turn more cautious.

“We do not believe the latest price gains are sustainable. Another price slump in the direction of $80 is more likely than another rise in the direction of $90,” Commerzbank said.