THE MAIN INDEX started the week in the red as positive US economic data boosted chances of another rate hike by the Federal Reserve within the year.

The bellwether Philippine Stock Exchange index (PSEi) declined 0.65% or 51.86 points to 7,837.47.

The broader all shares index also dropped 0.46% or 22.14 points to close at 4,712.98.

“The market reacted to the US jobs report on Friday. This signals that a rate hike is looming soon, on track to meet the Fed’s target,” AB Capital Securities, Inc. senior research analyst Lexter A. Azurin said in a text message.

US job growth surged more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Fed on course for a third rate hike this year.

Nonfarm payrolls jumped by 222,000 jobs last month, driven by hefty gains in health care, government, restaurants and professional and business services sectors, the US Labor Department said on Friday.

That was the second biggest payrolls increase this year and beat economists’ expectations for a 179,000 rise. The economy also created 47,000 more jobs in April and May than previously reported. While the unemployment rate rose to 4.4% from a 16-year low of 4.3% in May, that was because more people were looking for work, a sign of confidence in the labor market.

Fed Chair Janet L. Yellen will make her semi-annual testimony to the US Congress on Wednesday, and investors are expecting the central bank chief to drop further hints on the Fed’s tightening plans.

Harry G. Liu, president of Summit Securities, Inc., said investors are still waiting for catalysts, such as the opening of Congress later this month wherein the Duterte administration’s tax reform package is expected to be discussed, adding that the ongoing infighting in Marawi may be keeping the index from soaring.

Only the financials counter posted gains on Monday, climbing 0.38% or 7.57 points to 1,968.47.

Meanwhile, services fell 1.02% or 17.43 points to 1,684.27; holding firms slid 0.79% or 62.85 points or 7,834.44; industrials dropped 0.64% or 71.48 points to 11,068.44; property edged down 0.54% or 20.04 points to 3,631.24; and mining and oil inched down 0.12% or 15.43 points to 12,594.63.

Losers outnumbered advancers at 104 to 91, while 51 names were unchanged.

Value turnover climbed to P7.07 billion from Friday’s P6.90 billion as 1.65 billion shares changed hands.

Net foreign buying was logged at P35.50 million, a turnaround from the P152.37 million in net selling seen last Friday.

Southeast Asian stock markets edged lower on Monday in lackluster trade, in the absence of immediate catalysts.

On a broader scale, there may be lingering rebalancing flows away from emerging market yield plays after the recent slew of rhetoric from central banks, said Emmanuel Ng, a strategist at OCBC Bank, Singapore. — J.C. Lim with Reuters