Home Editors' Picks PSEi drops as Fed says US economy ‘downshifted’
PSEi drops as Fed says US economy ‘downshifted’
PHILIPPINE shares declined on Thursday along with other markets in the region after the US Federal Reserve reported slower economic activity amid a fresh surge in coronavirus disease 2019 (COVID-19) cases due to the Delta variant.
The Philippine Stock Exchange index (PSEi) lost 25.37 points or 0.36% to close at 6,924.02 on Thursday, while the all shares index inched down by 5.50 points or 0.12% to 4,280.79.
“The market finished lower together with most Asian markets after the US Federal Reserve released a report showing that their economic activity slowed down in July and August amid the ongoing spread of the Delta variant,” Timson Securities, Inc. Trader Darren Blaine T. Pangan said in a Viber message.
“[The] Fed’s Beige Book reflected that businesses are experiencing escalating inflation because of supply shortages. These rising costs would likely be passed on to the consumers,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a separate Viber message.
The US economy “downshifted slightly” in August as the renewed surge of the coronavirus hit dining, travel and tourism, the Fed said on Wednesday, but the economy overall remained in the throes of a post-pandemic rush of rising prices, labor shortages and stilted hiring, Reuters reported.
“The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions,” the Fed reported in its latest Beige Book compendium of anecdotal information about the economy.
“Back home, the UK-based think tank Pantheon Economics forecasts that inflation will accelerate further, driven by the rising global commodity prices,” Mr. Limlingan added.
Headline inflation stood at 4.9% in August, its fastest pace in 32 months, Pantheon Economics said inflation could exceed six percent by the end of the year.
Majority of sectoral indices posted gains on Thursday except for holding firms, which shed 51.61 points or 0.73% to end at 6,981.59, and services, which declined by 12.01 points or 0.66% to 1,790.20.
Meanwhile, industrials increased by 25.43 points or 0.25% to 10,154; mining and oil climbed 13.68 points or 0.14% to 9,639.79; financials went up 1.08 points or 0.07% to 1,449.61; and property rose 0.45 point or 0.01% to 3,102.93.
Value turnover dropped to P4.39 billion with 920.41 billion shares switching hands on Thursday, from the P5.87 billion with 742.74 billion shares traded the previous day.
Decliners narrowly beat advancers, 96 versus 94, while 44 names were unchanged. Net foreign selling climbed to P271.16 million yesterday from the P49.55 million logged on Wednesday.
“Friday being the last day of the trading week, we’ll have to see if the index retests its nearest resistance at 7,000, while immediate support may be drawn at the 6,780 level,” Timson Securities’ Mr. Pangan said. — K.C.G. Valmonte with Reuters