PHILIPPINE SHARES dropped on Monday to track Wall Street’s decline after the US personal consumption expenditures (PCE) price index rose in January, fanning bets of more rate hikes from the US Federal Reserve.

The benchmark Philippine Stock Exchange index (PSEi) declined by 86.56 points or 1.29% to close at 6,599.34 on Monday, while the broader all shares index went down by 39.95 points or 1.11% to end at 3,532.25.

“The local bourse plummeted following the surprising acceleration in US core PCE inflation, which was reported last Friday and stirred up concerns regarding Fed rates,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.

“Philippine stocks fell after Wall Street had its worst week of the year last week after the personal consumption expenditures price index showed a stronger-than-expected increase in prices in January and burgeoning rumors that the Federal Reserve will raise borrowing costs a few more times,” Timson Securities, Inc. Head of Online Trading Marc Kebinson L. Lood said in a Viber message.

Wall Street’s main indexes posted their biggest weekly drop of 2023 after sharp losses on Friday, as investors braced for the possibility of more aggressive rate hikes from the US Federal Reserve as economic data pointed to resilient consumers, Reuters reported.

Data on Friday showed the PCE price index, the Fed’s preferred inflation gauge, shot up 0.6% last month after gaining just 0.2% in December. Consumer spending, which accounts for more than two-thirds of US economic activity, jumped 1.8% last month, exceeding forecasts for a 1.3% rise.

“At home, our BSP (Bangko Sentral ng Pilipinas) governor is still seeing another rate hike by at least 25 bps (basis points),” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

BSP Governor Felipe M. Medalla last week said they could hike borrowing costs at their meeting on March 23, adding that a smaller 25-bp move is the “most likely” option amid signs of slower inflation in February.

The BSP hiked rates by 50 bps for a second straight meeting on Feb. 16 to tame inflation.

Almost all sectoral indices closed lower on Monday. Services went down by 57.95 points or 3.46% to 1,614.55; mining and oil dropped by 353.68 points or 3.2% to 10,687.74; property declined by 44.81 points or 1.55% to 2,840.95; industrials fell by 134.20 points or 1.39% to 9,500.58; and holding firms lost 60.66 points or 0.94% to end at 6,391.34.

Meanwhile, financials gained 4.94 points or 0.27% to close at 1,802.20.

Value turnover went up to P7.5 billion on Monday with 893.23 million shares changing hands from the P4.35 billion with 932.40 million issues traded on Thursday.

Decliners outnumbered advancers, 149 versus 55, while 34 names closed unchanged.

Net foreign selling rose to P736.06 million on Monday from P712.96 million on Thursday.

Both Timson Securities’ Mr. Lood and AP Securities’ Mr. Temporal placed the PSEi’s support at 6,500 and resistance at 6,800. — A.E.O. Jose with Reuters