LOCAL SHARES ended lower on Thursday as high US inflation caused fears of a bigger rate hike from the Federal Reserve and despite better Philippine gross domestic product (GDP) growth in the first quarter.

The benchmark Philippine Stock Exchange index dropped 103.56 points or 1.56% to close at 6,532.30 while the broader all shares index fell 40.76 points or 1.14% to end at 3,517.21.

“Philippine shares plunged despite the better-than-expected GDP as sentiment was dragged by hotter-than-expected US inflation data,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “[Local] inflation has been much more manageable and the Bangko Sentral ng Pilipinas has had more room to operate the timing of raising its rates, unlike the US Federal Reserve.”

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a mobile phone message that the high US inflation print may have caused fears of a bigger rate hike from the Fed.

“US inflation staying near its highs triggered concerns that the Federal Reserve may pursue more aggressive monetary tightening policies in their upcoming meetings,” Mr. Tantiangco said.

Headline US consumer prices rose 8.3% for the 12 months to April, Reuters reported. That was slower than the 8.5% pace of a month earlier and raised hopes that the pace of price rises has peaked. However, it was also higher than market forecasts for 8.1%, and reaffirmed concerns that rates will need to rise quickly to tame it.

Meanwhile, on Thursday, the Philippine Statistics Authority reported that the economy grew by 8.3% year on year in the first quarter, beating market estimates, buoyed by base effects and reopening of the economy.

The GDP growth print in the first quarter was a turnaround from 3.8% decline in the same period last year and faster than the revised 7.8% in the fourth quarter of 2021.

It was also the highest in three quarters or since the 12.1% in the second quarter last year. It beat the median estimate of 6.7% in a BusinessWorld poll and is within the government’s 7-9% target.

All sectoral indices closed lower on Thursday. Property retreated by 2.74% or 81.31 points to 2,879.29; financials went down 2.27% or 36.72 points to 1,574.69; industrials declined 1.35% or 124.81 points to 9,079.37; services shrank 1% or 19 points to 1,868.50; holding firms decreased 0.33% or 20.36 points to 6,118.99; and mining and oil sank 0.23% or 26.34 points to 10,973.05.

Value turnover on Thursday amounted to P7.42 billion with 1.59 billion shares switching hands, higher than the P6.64 billion with 1.92 billion issues logged the previous day.

Decliners bested advancers, 128 versus 70, while 48 names ended unchanged.

Net foreign selling reached P1.28 billion, higher than the P441.63 million in net sales posted on Wednesday. — R.M.D. Ochave with Reuters