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Shares snap climb ahead of Fed policy statement
By Krista A.M. Montealegre, National Correspondent
STOCKS broke a three-day winning streak on Wednesday, as investors looked ahead to the conclusion of the United States Federal Reserve’s monetary policy meeting.
Emerging out of the Labor Day holiday, the benchmark Philippine Stock Exchange index (PSEi) shed 83.18 points or 1.06% to end at 7,736.07.
The broader all-shares index slid 24.08 points or 0.51% to close at 4,699.08.
“Investors remained on the sidelines ahead of the monetary policy meeting in the US,” Edgar V. Lay, junior equity analyst at AB Capital Securities, Inc., said in a phone interview, adding that JG Summit Holdings, Inc., Ayala Corp. and PLDT, Inc. accounted for 57 points of the day’s decline.
“While there is only a 34% chance that the Fed will raise rates (this month), there is uncertainty that the central bank may raise interest rates four times this year amid rising inflationary pressure,” Mr. Lay said.
The Federal Open Market Committee is widely expected to keep interest rates steady at the end of the two-day policy meeting. Investors, however, will search for hints on the future pace of monetary tightening against a backdrop of rising inflation and low unemployment.
The Fed hiked its benchmark lending rate three times in 2017.
“The market’s pessimism overcame news of [S&P Global Ratings]’s possible credit upgrade for the country the other day, which could have been reasonably expected given the persistent net foreign selling despite the market’s rally since Thursday,” PNB Securities President Manuel Antonio G. Lisbona said in a mobile phone message.
Leading the market’s weakness was the holding firms sub-index, which fell 127.81 points or 1.61% to 7,780.69.
Services also dropped 15.68 points or 1% to 1,543.49; mining and oil declined 85.55 points or 0.81% to 10,476.01; financials went down 9.35 points or 0.47% to 1,960.28; and property lost 9.20 points or 0.25% to 3,612.97.
Industrials was the lone counter in the green, with a gain of 11.03 points or 0.09% to 11,121.39.
Value turnover improved to P6.53 billion as 1.29 billion shares changed hands, from P6.41 billion on Monday.
Market breadth was positive, as advancers dominated decliners, 117 to 87, while 43 issues were unchanged.
Foreign investors remained in selling territory, with net outflows of P340.68 million, slower than the net sales of P605.44 million in the previous session.
“It isn’t unreasonable to expect that this kind of volatility will persist in the near future given interest rate pressures. Short-term traders are reminded to keep their stops tight while longer-term investors should keep an eye out for compelling value,” PNB’s Mr. Lisbona said.