Shares slip amid renewed U.S.-China tariff war

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Metro Manila (CNN Philippines, May 14) — Local stocks bled on Tuesday, with the outcome of the midterm polls failing to lift sentiment as markets reeled from fresh tariffs imposed by China on U.S. goods.

The outcome of the May 13 midterm polls failed to lift local shares, with the benchmark Philippine Stock Exchange index (PSEi) slipping to 7,589.92 as of midday recess.

Stocks were down 1.97 percent on Tuesday as the market resumed trading after the May 13 holiday in observance of election day.

Traders attributed the bearish sentiment to a global rout due to revived hefty tariffs between the United States and China.

"The election result should have been positive for the markets, as the vote of confidence gives the president more room to speed up reforms. But the trade war is casting a shadow of worry," said Jonathan Ravelas, chief market strategist of BDO Unibank.

Ravelas said the sell-off has affected other markets as a "typical knee-jerk action" to fresh trade tensions offshore.

China retaliated by raising tariffs on $60 billion worth of U.S. goods by June 1, in response to the U.S. raising duties on $200 billion worth of Chinese exports on Friday.

READ: China strikes back at United States with higher tariffs on American goods 

The Dow on Monday fell by more than 500 points on fresh news that the trade war is escalating further.

"The breakdown of the index below the month-long support of 7,714.00 can be attributed to the negative spillover from Wall St.'s steep nosedive yesterday, after China retaliated on tariffs," said Rens Cruz of Regina Capital.

He added that the Philippines also posted a decline in the MSCI emerging markets index.

Meanwhile, Cruz said the Philippine elections were not a "major catalyst" to the bearish performance of local shares.

The PSEi closed at 7,646.66 on Tuesday, down by 1.23 percent.