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Main index drops as US central bank hikes rates

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PSE BGC bells

STOCKS SLIPPED on Thursday following the US Federal Reserve’s decision to hike benchmark rates during its last policy meeting for 2018.

The bellwether Philippine Stock Exchange index (PSEi) tumbled 0.21% or 16.21 points to close at 7,563.41 yesterday. The broader all-shares index, meanwhile, eked out gains of 0.05% or 2.42 points to 4,544.13.

“Philippine shares traded mildly lower at close, as attention shifted to the Fed, which still raised their policy rates,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message.

The Fed’s policy-setting Federal Open Market Committee decided to hike interest rates by 25 basis points yesterday, bringing key interest rates within the 2.25% to 2.5% range. At the same time, the Fed hinted at two more tightening moves in 2019, lower than the previous forecast of three.




“Changes to the post-meeting statement were generally dovish as well. While the growth characterization was more upbeat than we had expected, the policy guidance was a bit more dovish than we had expected,” Mr. Limlingan said.

Markets in the US plunged following the decision, with the Dow Jones Industrial Average falling to a 52-week low after it shed 351.98 points or 1.49% to 23,323.66. The S&P 500 index slumped 1.54% or 39.20 points to 2,506.96, while the Nasdaq Composite index also lost 2.17% or 147.08 points to 6,636.83.

Papa Securities Corp. Sales Associate Gabriel Jose F. Perez also attributed the PSEi’s weakness to the US markets’ performance, in addition to foreign investors’ position.

“Another red day for the PSEi today as another decline from the US markets [Wednesday] night coupled with more net foreign selling dampened the general sentiment,” Mr. Perez said in an e-mail.

Net foreign selling swelled to P490.56 million on Thursday versus P72.98 million in the previous session.

Four sectoral indices ended the day on a negative note, led by the mining and oil counter which dropped 1.49% or 122.46 points to 8,060.22. Property shed 0.98% or 36.54 points to 3,692.06; holding firms dipped 0.17% or 13.26 points to 7,422.19, while industrials went down 0.11% or 13.17 points to 11,061.69.

In contrast, services gained 0.6% or 8.76 points to 1,459.81. Financials also rose 0.18% or 3.32 points to 1,779.60.

Value turnover stood at P5.88 billion yesterday after some 875.14 million issues switched hands, down slightly from Wednesday’s P5.97 billion.

Despite the PSEi’s drop, market breadth favored advancers over losers, 117 to 78, while 42 names were unchanged.

“With a long Christmas weekend ahead of us, we might see muted trading for the last day of the week. The persistent net foreign selling remains as well as a significant overhang for the market, preventing it from surging any further,” Mr. Perez said. — Arra B. Francia