Stocks, peso fall on Fed hike concerns

By Jenniffer B. Austria

LOCAL stocks and the Philippine peso fell Tuesday on concerns over weak China trade data and possible new interest rate hikes by the US Federal Reserve.

The Philippine Stock Exchange index dropped below the 6,500 level Tuesday on weak China trade data.

The 30-company bellwether lost 34.81 points, or 0.54 percent, to close at 6,472.97, while the broader allshares index slipped 12.81 points to settle at 3,461.11.

“The index failed to sustain yesterday’s technical rebound as investors sold off after disappointing China trade date that showed a massive contraction in July

China logs biggest fall in exports for more than 3 years

BEIJING—China last month suffered its biggest fall in exports for more than three years, official data showed Tuesday, as the world’s second-largest economy is battered by sluggish global demand and a domestic slowdown.

The data will likely ramp up calls for leaders to do more to revive growth, having laid out a series of stimulus measures in recent weeks focusing on consumers and the troubled property sector.

Sales of Chinese products to foreign markets sank 14.5 percent on-year last month, a third consecutive drop, according to the customs authority.

The decline was bigger than expected and the heaviest since a 17.2 percent plunge in January-February 2020, when the economy came to a standstill in the early weeks of the Covid-19 pandemic.

Apart from a brief rebound in March and April, exports have been in constant decline since October.

The threat of recession in the United States and Europe, combined with high inflation, has contributed to weakening international demand for Chinese products in recent months.

Exports dived 12.4 percent on-year in June.

Shipments to the European Union in the first seven months of the year came to 2.08 trillion yuan ($288.9 billion), down 2.6 percent, the customs authority said in a separate statement on Tuesday.

Meanwhile, imports shrunk a forecast-busting 12.4 percent, a ninth straight month of contraction and further evidence that domestic demand has fallen off a cliff.

“China trade figures for July disappointed again,” Ken Cheung Kin Tai, an analyst at Mizuho Bank, wrote in a note.

“The weak trade figures highlighted the sluggish external demand, while (importers) refrained from purchasing goods for domestic production and investment,” Cheung said. AFP imports and exports,” China Bank Capital managing director Juan Paolo Colet said.

Investors are expected to monitor the release of US July inflation rate and the Philippines’ second-quarter gross domestic product data this week.

The peso also tumbled to 56.24 against the US dollar Tuesday from 56.02 Monday as soaring global crude prices could push up imports this month.

Meanwhile, stock markets stuttered Tuesday on renewed concerns the Fed would hike rates again, while another weak batch of trade data compounded worries about the struggling Chinese economy.

The positive sentiment that fueled a rally through much of July has given way to nervousness that while US inflation is coming down, officials will keep tightening monetary policy to make sure they have prices under control.

Those concerns were magnified Monday when Fed

Governor Michelle Bowman repeated her weekend comments that she wanted to see “evidence that inflation is on a consistent and meaningful downward path” and rates should be lifted again.

Talk of another increase has jolted the feel-good mood that came after the Fed’s latest policy meeting, when it said it would be more data-dependent in making decisions -- which many took as a hint it had finished raising rates.

Still, New York Fed chief John Williams told the New York Times he thought “monetary policy is in a good place—we’ve got the policy where we need to be”.

In an interview published Monday, he added it was “an open question” on whether rates needed to go even higher. But he said if inflation continued to soften then interest rates could start coming down next year or in 2025. With AFP

Japan’s SoftBank sees shock $3.3-b first-quarter net loss

TOKYO, Japan—Japanese investment giant SoftBank Group reported on Tuesday a surprise net loss of more than $3 billion in the first quarter as it was hit by a drop in the share prices of major holdings as well as a weaker yen.

The firm has made huge bets to find and grow hot new tech ventures around the world, but that has left its earnings vulnerable to market forces.

Results have lurched between dizzying highs and lows in recent years, with China’s crackdown on its tech sector taking a toll on the company.

And on Tuesday it said it lost an eye-watering 477.6 billion yen ($3.3 billion) in the three months to June, badly missing a 73 billion yen profit forecast by analysts in a Bloomberg News survey.

The company suffered investment losses “due to declines in the share prices of Alibaba, Deutsche Telekom, and T-Mobile US”, it said in a statement.

SoftBank’s Vision Fund investment unit, however, swung to profit after five straight quarters of losses.

SoftBank Group is going through a broad rethink to restore its financial health after taking a heavy hit from global economic disruptions caused by the pandemic.

It is moving to list British semiconductor firm Arm in New

York while selling down its stake in Alibaba.

Arm is hoping to raise as much as $10 billion in the initial public offering, valuing it at about $60-70 billion, according to Bloomberg, making it the largest tech listing this year.

Going public “will be a positive factor if the IPO is done in fiscal 2023, as SoftBank will sell part of its shares in Arm at some point”, Hideki Yasuda, analyst at Toyo Securities, told AFP.

SoftBank initially hoped to sell Arm to US chip giant Nvidia, but the $40-billion deal was scrapped over regulatory objections.

According to a report by the Financial Times last month, Nvidia is in talks to join a list of large “anchor investors” to support Arm’s IPO as early as September.

SoftBank is also reportedly planning to sell almost all of its stake in e-commerce giant Alibaba. AFP