The local stock market dropped on late selling on news of the local transmission of COVID-19 Delta variant towards the end of the session.

The main index shed 34.10 points or 0.51 percent to close at 6,693.83 as the Mining and Oil counter plunged while the Services sector was the only index to hold its ground.

Volume rose to 2.4 billion shares worth P7.59 billion as losers swamped gainers 164 to 48 with 34 unchanged.

“Philippine shares slumped as many watched vigilantly the number of covid cases from the new delta variant strain,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

He added that, “Meanwhile, funds are focusing their efforts in the US as a new wave of earnings reports rolled in and U.S. Fed Chair Powell's testimony to Congress reached its final day.”

Powell reiterated Thursday's thoughts that the inflation would remain hot for several months before normalizing. So, the Fed is not rushing to end its asset purchases.“

Philstocks Financial Senior Supervisor for Research Japhet Tantiangco said “Late day selling sent the local market lower. This came as 16 more COVID-19 cases with the Delta variant have been detected in the Philippines, 11 of which were through local transmission.”

He noted that, “The said variant which is seen to be more infectious may cause a surge of COVID-19 cases in the country, in turn posing risks against the local economy.“

AAA Equities Head of Research Chris Mangun said “Local equities suffered substantial losses due to increased selling pressure. Investors are turning more and more cautious despite an easing of some restrictions on Metro Manila.”

He added that, “The situation in Indonesia, which is now the epicenter of the pandemic, may have dampened the sentiment. There are several similarities between the Philippines and Indonesia mainly the geography (archipelago) and the economy.”

“Another factor is that Indinesia has vaccinated about 5 percent of its population with 85 percent of its vaccines from China, almost the same as ours. Lenient mobility may be the culprit for their surge and it is reminding investors of the consequences,” said Mangun.

He explained that, “The easing of restrictions, which was cheered by investors not long ago, may be having the opposite effect on the market right now due to fears of a more deadly surge in cases. Investors are downsizing positions until more of the population has immunity.”