Philippine Market Outlook March 26, 2019

MARKET OUTLOOK

Local equities plunged with much of the world on Monday as investors shunned risk in the face of mounting signs of a global growth slowdown ahead.

It was more of the offshore concerns that caused the local market’s retreat. First, there’s the the inverted yield curve in the US which is usually associated with an upcoming recession.

The contraction of the Eurozone Manufacturing Purchasing Managers’ Index also weighed on sentiment, as manufacturing activity was reported to fall to 52.5 in March, its lowest level in almost two years.

All of these together with the dovish stance of the monetary policies of the major economies including the US, the European Union, and China are backing the notion of a slowdown in the global economy.

The market will continue digesting what is going on and look for footing as worries about a slowdown in global economic growth linger.

Investors largely shrugged off Special Counsel Robert Mueller's report that President Donald Trump's campaign did not collude with Russia, despite S&P 500 futures initially rising on Sunday.

The report left unresolved the issue of whether Trump obstructed justice by undermining the investigations that have dogged his presidency.

Top US officials travel to Beijing for the latest round of high-level talks, which are scheduled to start on March 28.

Market participants went from being worried about a 4% yield on the 10-year and inflation, and now everyone is worried about a recession and rates going lower. That will certainly continue affecting the tone.