Share prices slide anew on jobs, rate hike worries

MANILA, Philippines — Stocks tumbled anew, weighed down by higher jobless numbers on the local front and as investors braced for a US jobs report that could provide clues on the size and pace of the Federal Reserve’s near-term interest rate increases. The benchmark Philippine Stock Exchange index ended the week at 6,589.88, down by 19.39 points or 0.29 percent, while the broader All Shares index slipped to 3,540.39, down by 8.80 points or 0.25 percent.

Total value turnover stood at P8.768 billion. Market breadth was negative, 119 to 57, while 45 issues were unchanged.

Unicapital Securities said investors fretted over the higher unemployment rate reported for January 2023. The state statistics agency said the jobless rate in January stood at 4.8 percent, inching up from 4.3 percent recorded in December 2022.

“This adds to investors’ concerns of high inflation and elevated interest rates environment,” Unicapital said.

Meanwhile around Asia, the weekly US jobs data released on Thursday prompted market participants to expect the Fed might be less aggressive than previously thought.  However, given the uncertainty ahead of the US non-farm payrolls data, investors pulled back from riskier Asian assets.

The February report is due later in the day, with payrolls expected to show an increase of 205,000 after surging by 517,000 in January, according to a Reuters survey of economists.

Thursday’s data showed US jobless claims rose last week by the most in five months, but the numbers were softer than expected.

Foreign investors sold $1.5 billion in Asian market assets during February as China’s economic growth optimism was overshadowed by concerns that the Fed funds rate will end up surging higher than expected, Khoon Goh, head of Asia research at ANZ said in a note.

“We do not expect a repeat of last year’s massive portfolio outflows from Asia despite some volatility in the near term, especially if Asian central banks are forced to do more due to a higher terminal Fed funds rate,” Goh added.

Analysts at Westpac expect market participants to gain confidence and search for opportunities going forward helping capital flow from the US dollar and into Asia, as Fed’s policy is seen to take effect, reining in inflation.