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THE MORNING VIEW



News Briefs
August 2, 2021
 
Local Key Events
  • The country's headline inflation likely slowed down in July, as analysts polled by BusinessWorld said, returning to the central bank’s target range of 3.9-4.7%. It is also noted that improved meat supply and slower increase in transport costs likely offset higher prices of fuel and other food items. Moreover, analysts stated that the easing inflation and the rising number of coronavirus cases with the Delta variant strengthen the case for the BSP to retain its loose policy.
  • Universal Robina Corporation (PSE Ticker: URC) announced its net income for the first half of the year amounting to Php 8.5 billion, which is 42% higher to the same period in 2020, despite the pandemic crisis. The company also reported an increase of 5% in dividends and a share repurchase plan for 2021. Its financial position is likely to strengthen by cash profits from the sale of its remaining 60% stake in the Unisnack Oceania joint venture.
Local Indices
  • Local equities declined further as the Philippine government declared enhanced community quarantine in Metro Manila. The tighter restrictions will take place Aug 6 Until Aug 20. The PSEi finished at 6,270.23 (-3.48% DoD).
  • Local fixed income yields were mixed as investors weighed the likely easing of inflation for July and the lowered forecast of neutral policy rate. Meanwhile, lockdown woes continue to affect market sentiment. On average, yields went down by 0.25 bps DoD, led by the short-end and belly of the curve which declined by 0.61 bps and 0.19 bps DoD, respectively.
  • The Philippine peso strengthened as sentiment could improve on expectations of slower July inflation as well as positive manufacturing data. The peso rose as the government imposed stricter quarantine measures specifically in Metro Manila which reduced demand for the Dollar. The USD/PHP pair closed at 49.970 ( -0.67% DoD).
US and Europe Indices
  • US equities dipped along with tech giant Amazon, which registered its largest daily decline of 7.60% since May 2020, together with disappointing results from other heavily weighted companies such as Alphabet and Facebook. Despite their weaker-than-expected earnings and lower sales growth forecast, S&P 500 logged gains for the sixth consecutive month amid the rise in US consumer spending by 5.60% in June before the Delta variant surge. The DJIA closed at 34,935.47 (-0.42% DoD) while the S&P 500 closed at 4,395.26 (-0.54% DoD).
  • European equities declined amid concerns over the fast-spreading Delta variant and regulatory actions in China offset optimism around the quarterly earnings. In Europe, travel, leisure, and miners were the stocks most under pressure. The MSCI Europe closed at 152.74 (-0.50% DoD).
  • US Treasury yields declined as June 2021’s muted and below-forecast inflation reading of 3.5% YoY propped up the Fed’s transitory inflation outlook, signaling a prospective delay in tapering of asset purchases. Meanwhile, the US Treasury suspended sales of state and municipal bonds as part of its “extraordinary measures” to avert a potential government default in October amid the debt ceiling.  On average, yields dropped 2.35 bps, with the 2Y at 0.18% (-1.96 bps) and the 10Y at 1.22% (-4.70 bps).
  • The US Dollar strengthened amid safe-haven demand and as St. Louis Federal Reserve President James Bullard remarked that the Fed should start reducing its monthly bond purchases this fall. The DXY closed at 92.17 (+0.34% DoD).
Asia Pacific Indices
  • Asian equities fell as fears over the Delta variant and China’s regulatory crackdown continued to weigh on market sentiment. The MSCI APxJ closed at 652.87 (-1.12%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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