Shares slide to two-week low on Fed easing bets

PHILIPPINE SHARES extended their slide on Thursday, sinking to the 6,600 level, amid uncertainty over the US Federal Reserve’s policy easing cycle due to mixed economic data and the incoming Trump administration.

The bellwether Philippine Stock Exchange index (PSEi) dropped by 0.95% or 64.05 points to end at 6,638.54 on Thursday, while the broader all shares index lost 0.66% or 25.14 points to close at 3,734.94.

This was a two-week low for the PSEi as this was its worst finish since it ended at 6,557.09 on Nov. 14.

“The local market continued with its decline as investors remain concerned regarding president-elect Donald Trump’s tariff threats,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Adding to the worries is the uncertainty on the Fed’s policy easing pace amid uncertainties over the US economy.”

“The exit of foreign funds also weighed on the local bourse,” Mr. Tantiangco said.

Net foreign selling increased to P1.17 billion on Thursday from P539.05 million on Wednesday.

US consumer spending increased slightly more than expected in October, suggesting the economy retained much of its solid growth momentum early in the fourth quarter, but progress on lowering inflation appears to have stalled in recent months, Reuters reported.

The lack of success in bringing inflation back to the Federal Reserve’s 2% target, together with the prospect of higher tariffs on imported goods from the incoming Trump administration, could narrow the scope for interest rate cuts from the US central bank next year.

Minutes of the Fed’s Nov. 6-7 policy meeting published on Tuesday also showed officials appeared divided over how much farther they may need to cut rates.

The US central bank reduced rates by 25 basis points (bps) earlier this month, lowering its benchmark overnight interest rate to the 4.5%-4.75% range. It initiated its policy easing cycle in September, which marked its first reduction in borrowing costs since 2020, after hiking rates by 525 bps in 2022 and 2023 to quell inflation.

“Philippine shares continued to slide, retesting the 6,600 level once again in light value turnover as the US enters the Thanksgiving holiday,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.

All sectoral indices went down on Thursday. Industrials sank by 2.1% or 197.32 points to 9,185.15; property dropped by 1.48% or 37.56 points to 2,493.59; financials went down by 0.7% or 16.07 points to 2,253.85; holding firms retreated by 0.68% or 38.50 points to 5,598.43; mining and oil inched down by 0.02% or 1.62 points to 7,555.59; and services slipped by 0.02% or 0.58 point to 2,060.50.

Value turnover rose to P4.92 billion on Thursday with 974.65 million shares traded from P4.27 billion with 375.48 million issues exchanged on Wednesday.

Decliners outnumbered advancers, 120 versus 69, while 53 names were unchanged. — Revin Mikhael D. Ochave with Reuters