Stocks drop as BSP raises inflation outlook, Russia-Ukraine tensions escalate
STOCKS dropped on Friday after the Bangko Sentral ng Pilipinas (BSP) raised its inflation forecasts for this year and next and due to renewed tensions between Russia and the Ukraine.
The bellwether Philippine Stock Exchange index (PSEi) on Friday went down 20.14 points or 0.27% to end 7,418.79, while the broader all shares index declined 10.62 points or 0.27% to 3,923.69.
“Market sentiment [was dampened] by the upwardly revised higher inflation expectations and messaging of an ongoing pandemic exit plan by the monetary authorities,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.
The BSP kept benchmark interest rates steady at its meeting on Thursday to continue supporting the economy’s recovery, but signaled it is preparing an exit strategy to respond to inflation risks.
The BSP now expects a faster inflation rate of 3.7% for 2022 from its previous 3.4% estimate, still within the 2-4% target and slower than the 4.5% in 2021. The forecast for 2023 was likewise raised to 3.3% from 3.2% in the previous review.
“Philippine shares got caught in the crossfire, sliding this session as tensions between Washington and Russia over Ukraine flared,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message, noting this also caused US shares to drop.
Pro-Russia rebels in Ukraine accused government forces of shelling a village on Friday while Russian media reported more infantry and tank units were returning to their bases in contrast to Western fears of an imminent Russian invasion, Reuters reported.
For a second consecutive day, pro-Russian separatists who have been at war with Ukraine for years said they had come under mortar and artillery fire from Ukrainian forces, according to the Interfax news agency.
Kyiv and the rebels blamed each other for escalating tension after artillery and mortar attacks on Thursday, prompting fears that Russia, which has massed more than 100,000 troops near Ukraine’s borders, could get involved.
Kyiv and the pro-Russian separatists have been facing off for eight years, and a ceasefire between them is routinely violated, but the intensity of fighting increased notably this week.
The Dow Jones Industrial Average fell 622.24 points or 1.78% to 34,312.03; the S&P 500 lost 94.75 points or 2.12% to 4,380.26; and the Nasdaq Composite dropped 407.38 points or 2.88% to 13,716.72.
Back home, most sectoral indices ended in the red except for property, which went up 40.13 points or 1.15% to 3,503.45 and mining and oil, which climbed 129.42 points or 1.13% to 11,512.85.
On the other hand, industrials fell 89.96 points or 0.84% to 10,525.20; holding firms dropped 40.41 points or 0.57% to 7,050.43; services went down 9.84 points or 0.5% to 1,946.51; and financials decreased 5.15 points or 0.29% to 1,731.90.
Value turnover rose to P7.42 billion with 1.18 billion shares switching hands on Friday from the P6.82 billion with 911.04 million issues traded the previous day.
Advancers beat decliners, 94 versus 86, while 53 names closed unchanged.
Foreigners turned net buyers anew with P88.57 million in net purchases on Friday versus the P279.27 million in net selling recorded the previous day.
“The market will keep its eyes glued on updates from Ukraine as the US has not been painting a very encouraging picture of what could happen in Europe. This will continue to be a thorn on the market’s side,” COL Financial Group, Inc. Chief Technical Analyst Juanis G. Barredo said in a Viber message.
Mr. Barredo said the PSEi could move within 7,270 and 7,552 in the coming days. — MCL with Reuters
