THE MORNING VIEW
September 29 , 2021
Local Key Events
The World Bank downgraded its 2021 GDP forecast for the Philippines to 4.3%, from the prior forecasts of 4.7% in June and 5.5% in April. The multilateral calendar cited the surge in Delta infections and slow vaccination rate for the downgrade. The World Bank expects the Philippines to reach herd immunity by 2Q22.
San Miguel Corp. (PSE Ticker: SMC) have been in discussion with Palafox and Associates to help them with the Pasig River Expressway Project (PAREX). The PAREX project will run along the banks of the Pasig River and will be a six-lane elevated expressway that will start from Radial Road 10 in Manila to Circumferential Road 6 in Taguig.
Local equities fell amid negative sentiment following the World Bank’s downgrade on its Philippine GDP forecast for 2021 and 2022 to 4.3% and 5.8% from 4.7% and 5.9%, respectively. The PSEi finished at 6,885.36 (-1.02% DoD).
Local fixed income yields continued to rise in response to rising US Treasury yields. On average, yields rose by 2.10 bps DoD, led by the belly of the curve which rose by 3.90 bps.
The Philippine peso was flat as the market waited for the announcement of new restrictions in Metro Manila. The USD/PHP pair closed at 51.00 (+0.00% DoD).
US and Europe Indices
US equities declined amid rising yields on US Treasuries and inflationary worries, following hawkish comments from US and European central banks. The DJIA closed at 34,299.99 (-1.63% DoD) while the S&P 500 closed at 4,352.63 (-2.04% DoD).
European equities declined as investors weighed rising yields in the US, and renewed growth concerns over China’s economy. The MSCI Europe closed at 149.71 (-2.06% DoD).
US Treasury yields continued to rise following the statement from Chairman Jerome Powell that “elevation in inflation may last longer than expected”. On average, yields went up by 3.42 bps with the 2Y at 0.30% (+2.31 bps) and the 10Y at 1.54% (+5.03 bps).
The US Dollar continued to strengthen, tracking US treasury yields, as investors looked ahead of the potential Fed tapering this year and an interest rate hike that may follow. The DXY closed at 93.77 (+0.41%% DoD).
Asia Pacific Indices
Asian equities declined amid power supply issues in China. The power squeeze has caused factories to stop operations to meet the government’s goal for carbon reduction. The MSCI APxJ closed at 639.88 (-0.57% DoD).
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Sources: BPI, Business World, PDI, Phil Star, Manila Bulletin, Reuters, Briefing, Bloomberg, CNN, Dow Jones, The Wall Street Journal, CNBC , Market Watch
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