Stocks fall on hawkish Fed comments, new Russia sanctions

MANILA, Philippines — Emerging Asian markets retreated yesterday, weighed by potential aggressive monetary tightening by the US Federal Reserve, with investors also focusing on new sanctions on Russia for invading Ukraine.

“The local stock market followed global equities lower following comments from a Federal Reserve governor in support of more aggressive monetary tightening to fight inflation,” AB Capital Securities said in a commentary.

The benchmark Philippine Stock Exchange index lost 46.81 points or 0.65 percent to close at 7,109.26, its lowest in over a week, while the broader All Shares index fell by 16.94 points or 0.45 percent to finish at 3,780.49

Market breadth was negative with 102 losers against 79 gainers, while 51 issues were unchanged.

Adding to markets’ woes, China’s services sector activity saw a sharp contraction due to a surge in COVID-19 cases and the consequent hit to demand. China is the world’s manufacturing powerhouse and emerging Asia’s biggest trading partner.

“Apart from the Fed’s hawkish tone and the ongoing war, the disappointing services sector data from China and the continuing lockdown in Shanghai amid rising cases further undermined sentiments in Asia,” analysts at Maybank said in a note.

Wall Street’s S&P 500 index tumbled 1.3 percent after Fed Governor Lael Brainard said reining in inflation that is at a four-decade high is of “paramount importance.” Brainard said the Fed is set to keep raising rates after its March hike, its first in four years, and might decide at its May meeting to reduce bond holdings “at a rapid pace.”

The White House said Western governments would ban new investment in Russia following evidence its soldiers deliberately killed civilians in Ukraine. The US Treasury said President Vladimir Putin’s government would be blocked from paying debts with dollars from American financial institutions, potentially increasing the risk of a default.

European governments have resisted appeals to boycott Russian gas, Putin’s biggest export earner, due to the possible impact on their economies.