Stocks sink ahead of Fed meeting, inflation data
SHARES continued to decline on Monday ahead of the US Federal Reserve’s policy meeting and the release of Philippine inflation data.
The benchmark Philippine Stock Exchange index (PSEi) dropped by 10.17 points or 0.15% to close at 6,721.08, while the broader all shares index went down by 8.31 points or 0.23% to 3,596.83.
“Philippine stocks remained in a downturn on Monday as investors kept on their risk-off trading. The market was weak ahead of the Fed meeting and local inflation data this week. The Fed is expected to raise interest rates by 50 bps, but will be leaning on a higher hike by June as US inflation stayed elevated,” Papa Securities Corp. Equities Strategist Manny P. Cruz said in a Viber message.
“On the local scene, April inflation data will be reported this Thursday and the consensus is at 4.6%, higher than the 4% cap set by monetary authorities,” Mr. Cruz added.
“Very slim volumes on the exchange today ahead of tomorrow’s non-trading holiday. We have two key events in the short term, with the US Fed’s interest rate decision this Thursday and the national election next week. I expect trading volumes to remain thin until these events pass,” AAA Southeast Equities, Inc. President William M. Cabangon said in a Viber message on Monday.
Philippine financial markets will be closed on Tuesday in observance of Eid’l Fitr.
Investors expecting the Fed to hike rates by 50 basis points when it meets on May 3-4 and the uncertainty is around how hawkish Fed Chair Jerome Powell will sound in comments following the decision, Reuters reported.
Markets are pricing in an aggressive run of rate hikes from the Fed as it tries to tame soaring inflation amid the ongoing Russia-Ukraine crisis, continuing lockdowns in China, and soaring global commodity prices.
Meanwhile, a BusinessWorld poll of 17 analysts yielded a median estimate of 4.6% for April inflation, matching the midpoint of the central bank’s 4.2% to 5% forecast and going beyond its 2-4% target.
April inflation data will be released on May 5.
The majority of sectoral indices closed lower except for industrials, which gained 97.28 points or 1.06% to 9,278.71.
Meanwhile, financials sank by 19.03 points or 1.18% to 1,588.82; services dropped 12.59 points or 0.66% to 1,869.53; mining and oil lost 49.05 points or 0.42% to end at 11,475.71; property went down by 4.97 points or 0.16% to 3,051.16; and holding firms declined by 3.57 points or 0.05% to 6,338.
The MidCap index retreated by 6.51 point or 0.58% to 1,114.79 and the Dividend Yield index dropped by 4.82 points or 0.30% to close at 1,586.72.
Decliners overwhelmed advancers, 99 versus 60, while 67 names ended unchanged.
Value turnover decreased to P3.61 billion with 795.48 million shares changing hands on Monday from the P7.92 billion with 840.3 million issues seen the previous day.
Net foreign selling dropped to P491.11 million from the P1.68 billion seen on Friday. — Luisa Maria Jacinta C. Jocson with Reuters
