Main index extends decline ahead of Fed review

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THE Philippine Stock Exchange — PHOTO BY SANTIAGO J. ARNAIZ

By Arra B. Francia

LOCAL EQUITIES dropped on Tuesday, tracking the negative sentiment in global markets as investors expect a more hawkish tone from the US Federal Reserve’s upcoming meeting.

The benchmark Philippine Stock Exchange index (PSEi) lost 1.33% or 100 points to close at 7,420.40 yesterday, extending losses from the previous session. The broader all-shares index likewise slumped 0.88% or 39.88 points to 4,470.22.

“Market’s drop reflects concern on the Fed’s possible action after its meeting tomorrow. From the looks of its they will take a hawkish stance,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

The Federal Open Market Committee (FOMC) holds its two-day policy meeting on Dec. 18-19, with analysts expecting the body to raise benchmark rates by 25 basis points. If realized, this will be the fourth increase this year.

I.B. Gimenez Securities, Inc. Research Head Joylin F. Telagen also attributed the market’s performance to the FOMC’s decision.

“Until then, the PSEi might experience risk-off sentiment,” Ms. Telagen said in a separate message.

For Papa Securities Corp. Sales Associate Gabriel Jose F. Perez, the PSEi mirrored the performance of US markets.

“The story remains the same with negative sentiment due to US markets once again diving last night, along with renewed net foreign selling, proving to be the bane for the index,” Mr. Perez said in an e-mail.

Wall Street suffered a bloodbath overnight, with the Dow Jones Industrial Average falling 2.11% or 507.53 points to 23,592.98. The S&P 500 index tumbled 2.08% or 54.01 points to 2,545.94, while the Nasdaq Composite index also dipped 2.27% or 156.93 points to 6,753.73.

Meanwhile, back home, net foreign selling stood at P652.15 million on Tuesday, although narrower than the previous session’s P822.25 million.

The mining and oil counter was the lone sub-index that ended with gains, adding 0.18% or 14.99 points to 8,020.37.

The rest declined, led by financials which fell 2.06% or 36.52 points to 2.04% or 150.43 points to 7,239.39. Holding firms shed 2.03% or 150.43 points to 7,239.39; services tumbled 0.78% or 11.37 points to 1,435.32; property went down 0.08% or 2.96 points to 3,658.16; while industrials slipped 0.06% or 6.79 points to 10,972.06.

Some 4.93 billion issues valued at P8.5 billion switched hands, rising from Monday’s P5.94-billion turnover.

Decliners outnumber advancers, 124 to 73, while 38 names were unchanged.

“We remain cautious moving forward for the week as it looks like the index is still being swayed by the aforementioned movements from abroad. Continue to watch out for how US markets move [on Tuesday] to have an indication of what to expect…,” Papa Securities’ Mr. Perez said.