Stocks drop on profit taking after inflation data

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LOCAL EQUITIES slumped on Wednesday despite surging intraday, as investors earlier cheered the slower-than-expected January inflation print but eventually succumbed to profit taking.

The benchmark Philippine Stock Exchange index (PSEi) slipped 0.13% or 11.03 points to close at 8,058.45 yesterday, failing to sustain intraday gains which saw the main index rising to as high as the 8,200 level.

The broader all-shares index, meanwhile, ended nearly flat at 4,893.48, 0.01% or 0.94 point higher from the previous day.

“Looks like profit taking was the name of the game today as the index dove straight down, 155 points from its intraday high in fact, to close at 8,058.45. Index went up initially in the morning as the market welcomed January’s 4.4% inflation figure,” Papa Securities Corp. Sales Associate Gabriel Jose F. Perez said in an e-mail on Wednesday.

Investors initially cheered the better-than-expected inflation report for January, which saw the headline print slow to 4.4%. This is lower than the market consensus of 4.5%.

IB Gimenez Securities Research Head Joylin F. Telagen also noted that investors chose to cash in on gains at the market’s close after welcoming the lower inflation rate.

“After the non-trading day in celebration of Chinese New Year, investors are back and cheered the lower-than-expected inflation rate which might also lead for the BSP’s (Bangko Sentral ng Pilipinas) first monetary meeting to keep interest rates unchanged,” Ms. Telagen said in a text message.

The BSP’s policy-setting Monetary Board will meet on Thursday for its first meeting of the year, where analysts expect rates to stay unchanged at the current range of 4.25-5.25%.

The counter for holding firms was the lone sub-index that ended with a loss, dropping 1.23% or 98.92 points to 7,931.10.

The rest went up, led by mining and oil which jumped 1.37% or 118.36 points to 8,739.30. Services gained 0.74% or 12.05 points to 1,620.51; financials climbed 0.74% or 13.62 points to 1,853.18; industrials went up 0.54% or 63.93 points to 11,799.38; while property firmed up 0.48% or 19.27 points to 4,001.55.

Foreign investors continued their buying spree with net purchases of P947.17 million, albeit lower than Monday’s P1.01-billion net inflow.

Some 2.84 billion issues valued at P7.32 billion switched hands, mostly unchanged from the previous session’s turnover.

Advancers were almost double the decliners, 140 to 76, while 42 names were unchanged.

Overseas, Wall Street indices advanced ahead of US President Donald J. Trump’s State of the Union address. The Dow Jones Industrial Average inched up 0.68% or 172.15 points to 25,411.52. The S&P 500 index rose 0.47% or 12.83 points to 2,737.70, while the Nasdaq Composite index added 0.74% or 54.55 points to 7,402.08. Asian indices mirrored Wall Street’s ascent, ending mostly higher on Wednesday. — Arra B. Francia