STOCKS dropped on Monday as investors were cautious ahead of the release of minutes of the US Federal Reserve’s latest meeting and after the Bangko Sentral ng Pilipinas (BSP) hinted at more rate hikes moving forward.

The benchmark Philippine Stock Exchange index (PSEi) went down by 34.90 points or 0.51% to close at 6,744.12 on Monday, while the broader all shares index lost 13.94 points or 0.38% to end at 3,607.75.

“Philippine shares slipped ahead of the upcoming Fed meeting as US inflation weighed on investor sentiment. Market participants are overall still wary on Fed’s rate adjustments to tame inflation,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The PSEi ended lower for the third time as market continued to price in more rate concerns, with expectations for the Fed rate hike now moving to a 50 bps (basis points) next month from 25 bps,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.

Minutes of the Fed’s Jan. 31 to Feb. 1 meeting will be released on Wednesday. At that review, the US central bank raised its target interest rate by 25 bps to a range between 4.5% and 4.75%.

Some Fed officials have said they would support a bigger rate hike at their March 21-22 meeting following the release of data showing sticky US inflation.

The US consumer price index increased 0.5% last month after gaining 0.1% in December. In the 12 months through January, the  consumer price index increased 6.4%.

“The local bourse lost 34.90 points as investors remained cautious amid the hawkish stance of the Bangko Sentral ng Pilipinas and Fed,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

BSP Governor Felipe M. Medalla said after their policy meeting last week, where they raised borrowing costs by 50 bps, that a third or maybe fourth rate hike is likely this year.

He also said they could consider a 25-bp or 50-bp increase at their March 23 meeting.

All sectoral indices closed lower on Monday. Mining and oil declined by 136.33 points or 1.21% to 11,090.98; industrials dropped by 66.42 points or 0.67% to 9,726.54; property shed 14.44 points or 0.48% to end at 2,944.60; holding firms went down by 28.04 points or 0.43% to 6,457.34; financials lost 7.05 points or 0.38% to close at 1,811.75; and services inched down by 2.56 points or 0.15% to 1,700.57.

Value turnover declined to P3.3 billion on Monday with 483.44 million shares changing hands from the P5.68 billion with 851.14 million issues traded on Friday.

Decliners outnumbered advancers, 115 versus 72, while 47 names closed unchanged.

Net foreign selling declined to P43.79 million on Monday from P121.29 million on Friday.

AP Securities’ Mr. Temporal placed the PSEi’s support at 6,650 and resistance at 6,900, while Mercantile Securities’ Mr. See put support at 6,550 to 6,762 and resistance at 7,000 to 7,150. — Ashley Erika O. Jose