Advertisement

Fed remarks sink shares; market sees 4 rate hikes

Font Size

19022018_PSE-BGC_Arnaiz11
File photo of the new Philippine Stock Exchange headquarters in Bonifacio Global City, Taguig. — Photo by Santiago J. Arnaiz / BW FILE PHOTO

SHARE prices fell on Wednesday, Feb. 28, after comments from the chairman of the Federal Reserve, which were taken to mean that the Fed may resort to more than three rate hikes this year.

The 30-company Philippine Stock Exchange index (PSEi) shed 117.09 points or 1.36% to close at 8,475.29 today. The all-shares index lost 35.79 points or 0.69% to 5,082.94.

“PSEi’s dip could be due to weakness in the US markets last night after Jerome Powell signaled the possibility of more than three hikes this year,” Papa Securities Corp. trader Gabriel F. Perez said in an e-mail.

The new Fed chairman expressed optimism on the growth of the US economy, which could prompt US monetary authorities to raise interest rate hikes more frequently this year.

“It’s no longer a question of whether the Fed will raise interest rates, because they will raise interest rates. The question is frequency — how many times? Will it be two, three, or four? After last night’s testimony, there are more adherents for four rate hikes (and the market is now looking at) three and four rate adjustments,” Philstocks Financial, Inc. Head of Research Justino B. Calaycay, Jr. said by phone.

US markets ended in negative territory following Mr. Powell’s statements, with the Dow Jones Industrial Average giving up 1.16% to 25,410.03. The S&P 500 index was down 1.27% at 2,744.28, while the Nasdaq Composite index slipped 1.23% to 7,330.35.

The slower growth of SM Investments Corp., which disclosed yesterday that profit grew 6% to P32.9 billion, also failed to draw investors back into the market, according to Mr. Calaycay.

“We expect earnings to at least provide some push. But using SM as an example, it wasn’t really what could compel investors to rush back to the market. Right now we’re looking at the market consolidating and, we hope, building a firmer foundation or firmer support level as we await more numbers,” the analyst said.

The property sector posted the largest decline, dipping 91.59 points or 2.4% to 3,721.70. Holding firms lost 147.41 points or 1.68% to 8,585.06; financials dropped 11.28 points or 0.50% to 2,225.65; while services declined or 0.31% to 1,745.89.

On the other hand, the mining and oil sector recovered, rising 24.43 points or 0.20% to 12,253.82, while industrials climbed 13 points or 0.11% to 11,440.91.

A total of 16.91 billion shares changed hands, valued at P9.97 billion, against P9.25 billion on Tuesday. Advancers outnumbered decliners, 111 to 96, with 52 unchanged.

Foreign investors were net sellers for a seventh straight day, with outflows of P939.04 million, up sharply from the P276.98 million booked on Tuesday. — Arra B. Francia