Stocks retreat as oil prices extend fall

MANILA, Philippines – Local share prices retreated anew yesterday, joining regional peers, as the price of oil extended losses sparked by data showing a manufacturing slowdown in the world’s two largest economies.

The benchmark Philippine Stock Exchange index (PSEi) finished  58.91 points or 0.88 percent lower to 6,642.45 while the broader All Shares index finished at 3,805.82, down 20.03 points or 0.52 percent as nearly all subsectors closed in the red.

The Institute for Supply Management said Monday US factory activity shrank in January for a fourth straight month as a strong dollar and weak demand overseas pinched American manufacturers. The ISM’s manufacturing index followed a survey showing a slowdown in China’s manufacturing. China’s official survey found that manufacturing fell to its lowest level in more than three years.

The two reports sent the price of oil sharply lower. Benchmark US oil was down 54 cents to $31.08 per barrel in electronic trading on the New York Mercantile Exchange. On Monday, the price of US benchmark oil plunged $2, or 5.9 percent, to $31.62 a barrel in New York. Brent crude was down 71 cents to $33.52 in London.

Tim Condon, head of Asia research at ING, said the crash in global oil prices in the second half of 2014 caused the manufacturing slump, which is the main culprit behind the global growth slowdown.

“We think the 50 percent crash in global oil prices in the second half of 2014 caused the manufacturing slump by crushing commodity producers’ spending. However, we also think that in 2015, weaker manufacturing, especially in China, began to drive down oil prices. The negative feedback loop is causing severe strains,” he said.  AP