STOCKS declined on Tuesday following the release of data showing the country’s trade deficit widened and expectations of a rate hike from the US Federal Reserve.

The bellwether Philippine Stock Exchange index (PSEi) retreated 54.98 points or 0.77% to close at 7,085.69, while the broader all shares index lost 24.42 points or 0.64% to 3,775.46.

“The market declined today after the record high Philippine trade deficit data in November 2021 with the imports also posting new record high as the economy reopened further towards greater normalcy during the month,” Rizal Commercial Banking Corp.’s Chief Economist Michael L. Ricafort said in a Viber message on Tuesday.

The country’s trade deficit ballooned to $4.71 billion in November 2021, the biggest monthly gap on record, after imports soared by over a third, the latest data released by the Philippine Statistic Authority on Tuesday showed.

“The trade closed weaker ahead of key US inflation data releases, which will be out on Wednesday, and on the central bank news that could provide information about the future of monetary policy,” Regina Capital Development Corp.’s Head of Sales Luis A. Limlingan said in a Viber message.

Asian equities and the dollar struggled to find direction on Tuesday as investors awaited Fed Chair Jerome Powell’s appearance before the Senate Banking Committee, hoping for clues to the timing of expected policy tightening, Reuters reported.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2% after slipping much as 0.3%.

US December consumer inflation data will be released on Wednesday, with the headline figure seen coming in at a red-hot 7% on a year-on-year basis, boosting the case for interest rates to rise sooner rather than later.

The Fed in December flagged plans to tighten policy faster than expected in response, with a rate hike perhaps as soon as March.

Fears over soaring coronavirus cases in the country also affected Tuesday’s trade, said First Metro Investment Corp.’s Head of Research Cristina S. Ulang.

The Health department on Tuesday logged 28,007 new coronavirus cases, bringing active infections to 181,016.

All sectoral indices closed in the red. Mining and oil declined 132.43 points or 1.37% to 9,536.39; property dropped 40.79 points or 1.29% to 3,113.34; industrials fell 91.65 points or 0.89% to 10,190.16; holding firms tumbled 37.72 points or 0.54% to 6,906.40; services decreased 8.60 points or 0.43% to 1,949.29; and financials slipped 6.02 points or 0.37% to close at 1,619.71.

Value turnover rose to P6.91 billion with 877.97 million issues traded on Tuesday, from the P5.25 billion with 745.53 million shares that switched hands the previous day.

Decliners beat advancers, 105 against 82, with 43 names closed unchanged.

Net foreign selling jumped to P733.34 million from the P118.04 million logged after the Monday’s trade. — M.C. Lucenio with Reuters