Shares extend losses due to profit-taking

ABS-CBN News

Posted at Oct 23 2017 03:56 PM

MANILA - Share prices closed lower on Monday as investors took profits for the second straight session after the market scaled fresh peaks.

The Philippine Stock Exchange Index was down 0.86 percent to 8,348.32.

"There is still some room for market correction from where we are right now. Clearly, the market has moved quite fast to 8,500," said Sunlife Financial chief investment officer Mike Enriquez.

"This is just a healthy correction and investors should welcome this as a chance for us to load up again on some issues that we like," Enriquez told ANC, citing the consumer and property sectors.

Enriquez said investors were expecting strong third quarter earnings since the same three-period in 2016 did not get a boost from election-related spending.

"We probably might get more surprises on the upside in terms of reporting third quarter performance," he said.

Japanese shares jumped on a weaker yen on Monday as an election win for Shinzo Abe's ruling bloc gave a green light for more policy stimulus, while the euro eased as Spain's constitutional crisis aggravated concerns about political unity in the region.

The US dollar was the major beneficiary as President Donald Trump and Republicans took a small step toward tax cuts, boosting Wall Street stocks and lifting bond yields.

Japan's Nikkei raced up 1 percent to its highest since 1996 after Prime Minister Abe looked to have easily won in national elections over the weekend.

MSCI's broadest index of Asia-Pacific shares outside Japan held steady, while Singapore's main index reached its highest in over 2 years.

Investors assumed Abe's victory would allow the Bank of Japan to continue with massive monetary easing that depresses bond yields and the yen, even as the US Federal Reserve seems determined to hike rates again in December.

"This should extend the lifespan of 'Abenomics', including the BOJ's mega stimulus," wrote analysts at the Blackrock Investment Institute.

"We see the outcome as a mild positive for Japanese equities, and as a mild negative for the yen and Japanese government bonds."

The dollar rose 0.2 percent to 113.74 yen and briefly touched its highest since mid-July at 114.09. It faces stiff resistance at the July top of 114.49, but a break would open the way to its March peaks around 115.51. Against a basket of currencies, the dollar edged up 0.1 percent.

The yen even slipped against the euro, which was having its own troubles as the Spanish government urged Catalans to accept its decision to dismiss their secessionist leadership and to take control of the restive region.

The nation's biggest political crisis in decades enters a decisive week as Madrid tries to impose its control, although investors have so far assumed the political strife would not spread to elsewhere in the European Union.

The euro eased only a modest 0.13 percent on Monday to $1.1770 and has strong chart support around $1.1729.

LESS FOR LONGER

The single currency faces another hurdle on Thursday when the European Central Bank holds a policy meeting amid much talk it will cut back the amount of assets it buys every month, but also extend the program.

"As we have argued for some time now, the length of time the (quantitative easing) program runs for matters more than monthly size," said analysts at RBC Capital Markets.

"So while we look for a reduction by at least 30 billion euros in net terms ... we also expect that the ECB will keep the program open ended."

Asian share markets caught some tailwind from Wall Street's record finish on Friday when the passage of a US Senate budget resolution bolstered speculation that President Trump's tax-cut plan may move forward.

The Dow ended Friday with gains of 0.71 percent, while the S&P 500 rose 0.51 percent and the Nasdaq 0.36 percent.

In commodity markets, a firmer dollar nudged gold down 0.3 percent to $1,276.80 an ounce.

Oil prices edged ahead on supply concerns in the Middle East and as the US market showed further signs of tightening while demand in Asia keeps rising.

Brent crude rose 13 cents to $57.88 a barrel, while US crude futures added 25 cents to $52.09. -- with reports from Reuters