PSEi slides to near one-month low on war risks
THE MAIN INDEX sank to a near one-month low on Monday due to growing inflation risks due to the ongoing Middle East conflict, which could lead to more interest rate hikes from the Bangko Sentral ng Pilipinas (BSP).
The Philippine Stock Exchange index (PSEi) tumbled by 0.71% or 42.34 points to close at 5,901.15, while the broader all shares index went down by 0.51% or 17.09 points to end at 3,335.13.
This was the main stock benchmark’s worst finish in almost a month or since it closed at 5,869.49 on March 30.
“The PSEi started the week in the red as market sentiment remained cautious amid continued peso depreciation and renewed increases in crude oil prices. These developments fueled concerns over rising inflationary pressures, prompting fears of possible additional rate hikes by the central bank. As a result, investors stayed on the sidelines, weighing macroeconomic risks against near-term growth prospects,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“The local market started the week on a negative tone as expectations of rising inflation and interest rates at home dampened investors’ sentiment. Waning prospects of a deal between the US and Iran also continued to weigh on the bourse,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.
On Thursday, the BSP’s policy-setting Monetary Board raised the target reverse repurchase rate by 25 basis points (bp) to 4.5%, marking its first hike since October 2023.
BSP Governor Eli M. Remolona, Jr. signaled further tightening ahead via “a succession of modest rate hikes” as they try to temper spiraling prices due to the Iran war as the global oil shock pushes up inflation expectations.
The BSP now sees inflation breaching their 2%-4% tolerance band in 2026 and 2027. For this year, it expects the consumer price index to average 6.3%, significantly higher than the earlier 5.1% forecast. For 2027, the BSP also raised its projection to 4.3% from 3.8% previously.
Oil prices jumped almost 3% on Monday as peace talks between the US and Iran stalled and shipments through the Strait of Hormuz remained limited, keeping global oil supplies tight, Reuters reported.
Sectoral indices closed mixed. Mining and oil jumped by 1.96% or 345.70 points to 17,968.89; industrials increased by 0.42% or 37.22 points to 8,835.30; and services edged up by 0.14 point to 2,768.24. Meanwhile, holding firms declined by 1.73% or 79.93 points to 4,523.81; financials dropped by 1.15% or 21.25 points to 1,815.58; and property went down by 0.61% or 12.1 points to 1,954.20.
Decliners beat advancers, 107 to 86, while 56 names were unchanged.
Value turnover declined to P5.36 billion on Monday with 1.61 billion shares traded from P5.52 billion with 2.09 billion issues on Friday.
Net foreign selling increased to P677.34 million from P628.11 million in the previous session. — A.G.C. Magno
