Market retreats on revised data

Shares snapped a three-day upswing after economic managers warn of a deeper economic contraction this year and on reports that US pharmnaceutical firm Pfizer Inc had halved its coronavirus disease (COVID) vaccine production target for this year.

Trading across other emerging Asian stock markets remained mixed as sentiment which was affected by the vaccine development was partly offset by hopes that a US coronavirus aid plan will push through Congress.

Philippine Stock Exchange index dropped 0.7 percent and the peso eased after officials on forecast an 8.5 percent to 9.5 percent contraction in the economy, compared with a previous forecast of a 5.5 percent decline.

The weathervane ended at 7134.56, down 59.57 points or negative 0.83 percent after trading between 7097.35 and 7196.96. Volume of trades reached 143,288 shares valued at P8.212 billion.

The PSEi also ended lower due to some profit taking, mixed signals from the US and the higher than expected inflation print today, Regina Capital Development Corp. managing director Luis Limlingan assessed.

He noted that local and regional investors “waded into heavy weather on Thursday with gains withering in the final hour of trading. The November CPI (consumer price index) came out at 3.3 percent driven by higher prices of food items brought about by the effects of the recent typhoons.

Organization of Petroleum Exporting Countries (OPEC) and OPEC+ agreed after days of tense discussions to increase production by 500,000 barrels per day beginning January. This will bring the total production cuts at the start of 2021 to 7.2 million barrels per day (bpd). Brent crude inched higher by 0.95 percent to $48.71. US WTI (West Texas Intermediate) crude edged up 0.31 percent to $45.78.

Meanwhile, gold firmed as the dollar fell and investors clung to hopes of an eventual breakthrough over a fresh US stimulus bill. Spot gold gained 0.4 percent to $1,838.83 per ounce. US gold futures settled up 0.6 percent at $1,841.10.

Prices at worrying level
RCBC Treasury Group chief Economist Michael Ricafort said the inflation number in November was the highest since February 2019.

Though the latest spike in inflation is viewed as temporary and transitory, it could somewhat temper or limit any further monetary easing measures for now, especially and particularly on local policy rates, currently at a record low of 2 percent.