By Krista A. M. Montealegre,
National Correspondent

LOCAL STOCKS took a beating at the start of the week, joining a global equity sell-off on fears that the United States Federal Reserve may raise interest rates more aggressively than anticipated.

The Philippine Stock Exchange index (PSEi) plummeted 194.75 points or 2.21% to close at 8,616.

At the height of the sell-off, the bellwether index touched the 8,555.55 level — below the 2017 finish of 8,558.42 that wiped out gains of more than 5.8% for the year — before bargain hunting narrowed its losses.

The all-shares index also plunged 111.40 points or 2.15% to end at 5,070.42.

“Here at home, we were not spared by the onslaught of selling as the healthy employment data implied the rate hikes expected this year may reach four,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said via text.

Asian markets were engulfed in a sea of red on Monday, while US futures added to the huge losses booked last week by falling more than 250 points.

The retreat came after data from the US Labor department showed the economy created a better-than-expected 200,000 jobs in January, fueling bets that inflation will trek higher this year and the Federal Reserve may accelerate increasing borrowing costs to curb the rise.

The ongoing global correction is a turnaround from the blazing start to the year for equities, with the PSEi hitting an all-time high of 9,058.62 on optimism on the impact of the government’s tax reform program.

“We are trading at a very high level already so this is just natural profit taking. Maybe when prices have stabilized, we can retest the highs,” Miko A. Sayo, trader at AP Securities, said in an interview.

All counters finished in negative territory, led by property, which shed 125.21 points or 3.13% to 3,868.68. Industrials declined 319.59 points or 2.68% to 11,572; mining and oil dropped 316.96 points or 2.62% to 11,766.09; holding firms tumbled 220.49 points or 2.44% to 8,787.27; services lost 20.84 points or 1.21% to 1,697.27; and financials slid 19.47 points or 0.87% to 2,204.08.

Value turnover reached P8.51 billion after 1.17 billion shares changed hands, from P7.85 billion in the prior session.

Decliners dominated advancers, 170 to 33, while 38 issues were unchanged.

Foreigners remained in selling territory for the seventh straight session, with net outflows accelerating to P1.95 billion from P978.26 million on Friday.

Momentum indicators show that the correction may push through this week, Regina Capital said, while suggesting that a rebound could arise as technical indicators plunge within oversold ranges.

“The markets are still falling from its peak. We broke the minor support at 8,700 and we are reaching oversold levels so I think we can bounce back in the middle of the week,” AP Securities’ Mr. Sayo said.

RELATED ARTICLESMORE FROM AUTHOR