PHILIPPINE SHARES declined further on Tuesday on selling pressure amid expectations of faster US consumer inflation in January.

The bellwether Philippine Stock Exchange index (PSEi) declined by 47.52 points or 0.69% to 6,791.24 on Tuesday, while the broader all shares index went down by 11.31 points or 0.31% to end at 3,631.65.

“Selling pressure steadily weighed on prices through most part of the day as investors likely kept to the sidelines ahead of the US inflation report due out later. Investors may be bracing for a negative surprise,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail.

“This may also factor into investor expectations of higher terminal rates for the US Federal Reserve and the BSP (Bangko Sentral ng Pilipinas), and curb the appetite for equities in the near term. Note that the BSP’s policy decision is also due out this week,” Mr. Mercado added.

The US Bureau of Labor Statistics was set to release January’s consumer price index (CPI) data overnight, which was expected to show how effective Federal Reserve policy tightening has been in taming inflation.

Analysts expect the headline CPI to rise 0.5% in January, with the core number seen advancing 0.4%, compared with 0.3% in the previous month, according to a Reuters poll. On an annual basis, consumer price inflation likely eased to 6.2%, from 6.5% in December.

The US central bank raised the fed funds rate by 25 basis points (bps) to a range between 4.5% and 4.75% at its Jan. 31 to Feb. 1 meeting. Its next policy review is on March 21-22.

Meanwhile, the BSP will hold its first policy meeting for the year on Thursday, where analysts expect a 25-bp or 50-bp rate hike.

“The PSEi sank after the market succumbed to profit taking ahead of US CPI and BSP’s meeting,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.

All sectoral indices closed lower on Tuesday. Property went down by 27.80 points or 0.93% to 2,956.02; holding firms lost 45.96 points or 0.7% to end at 6,517.91; financials declined by 9.46 points or 0.51% to 1,822.53; services dropped 5.60 points or 0.32% to 1,711.25; mining and oil slid by 31.62 points or 0.27% to 11,435.4; and industrials inched down by 15.26 points or 0.15% to 9,855.70.

Value turnover went up to P7.37 billion on Tuesday with 969.20 million shares changing hands from the P6.60 billion with 1.01 billion issues traded on Monday.

Decliners outnumbered advancers, 103 versus 84, while 43 names closed unchanged.

Net foreign selling rose to P461.38 million on Tuesday from P373 million on Monday.

China Bank Securities’ Mr. Mercado placed the PSEi’s support at 6,780-6,800 and resistance at 7,000, while AP Securities’ Mr. Temporal put support at 6,700 and resistance at 7,000. — Ashley Erika O. Jose with Reuters

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