PSE remains hostage to Trump

The Philippine Stock Exchange (PSE) has been enjoying a relative rally these past couple of days, with the PSE index now at the 6,206.55, up from the doldrums of the 6,000 index support level, and at times even below.

- MARIANNE GO

To most Filipino investors this is a surprise, considering it comes with the looming shadow of huge tariffs being imposed by the US against its trading partners Canada, Mexico and China, that similarly threatens the world with a significant trade war that will disrupt the global supply chain.

The local stock market rally, of course, stems from events and perceptions of the US economy.

First, because of the uncertainties of a trade war, the US dollar has lost four percent of its value. Upon the announcement by US President Donald Trump of the 25 percent tariff on imports from Canada and Mexico, US stocks fell by almost 700 points, prompting a JP Morgan economist to predict a 40 percent chance of recession in the US economy "owing to extreme US policies."

Even as I write this column, the US stock market dropped by another 900 points following the imposition of additional tariffs on China, with Trump digging in and acknowledging that US farmers may feel some pain before they feel the gain that would come from his tariff policy.

As such, US consumer growth is now flat due to the uncertainties, with American consumer confidence now down by two percent. US housing and construction projects are now on a "wait and see" attitude, cautious about a possible rise in the cost of construction materials of up to 18 percent.