Stocks snap rally ahead of Federal Reserve meet

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STOCKS dropped yesterday on profit taking ahead of key central bank meetings.

After three straight trading days of closing at record highs, the Philippine Stock Exchange index (PSEi) on Tuesday fell by 131.44 points or 1.58% to end the session at 8,162.70, wiping out most of its recent gains.

The broader all-shares index also tanked as it lost 58.27 points or 1.19% to finish at 4,828.21.

“Philippine shares erased practically all its gains from yesterday after breaking record highs over the last few days. This happened as investors looked ahead to a key Federal Reserve meeting,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said on Tuesday.

The Fed was set to start a two-day policy meeting yesterday. Markets are expecting the US central bank to keep rates but give hints on planned rate hikes and the unwinding of its bond portfolio.

“Developed markets were more bullish as Wall Street also cheered a big defense industry deal,” Mr. Limlingan added.

The S&P 500 ended slightly higher on Monday as financial stocks rose ahead of a Federal Reserve meeting, but the Nasdaq pared gains sharply as technology stocks lost ground late in the session.

The Dow Jones Industrial Average rose 63.01 points or 0.28% to 22,331.35, the S&P 500 gained 3.64 points or 0.15% to 2,503.87 and the Nasdaq Composite added 6.17 points or 0.1% to 6,454.64.

Back home, all the sectoral indices slumped, with holding firms — one of the major gainers in recent days — giving up 173.26 points or 2.1% to close at 8,061.12.

Mining and oil lost 295.54 points or 2.07% to finish at 13,956.62; services stumbled by 33.35 points or 1.91% to 1,707.66; property stocks gave up 67.99 points 1.7% 3,923.50.

Losses incurred by financials as well as industrials were milder. Financial stocks lost 8.74 points or 0.43% to 1,984.20, while industrial issues dropped 21.17 points or 0.18% to 11,336.87.

Declining stocks outnumbered advancers, 121 to 69, while 54 issues finished unchanged. Trading value reached P8.91 billion, a tad higher than the previous day’s P8.11 billion, with 1.31 billion shares changing hands.

Net foreign selling widened to P272.03 million from P45.63 million the other day.

Still, others are optimistic that local equities will regain their recent strength and advance further.

Miko S. Sayo, trader at Angping & Associates Securities, Inc., earlier said: “I’m looking at 8,500 already in the next few days.”

Asked about the basis of his optimism, he said: “Pure technicals.”

Transpacific Broadband Group International, Inc. was the top gainer, followed by Intergrated Micro-Electronics, Inc.; Filipino Fund, Inc.; 2Go Group, Inc.; and Waterfront Philippines, Inc. F&J Prince Holdings Corp. “B” was the top loser, along with Paxys, Inc.; The Philodrill Corp.; Bloomberry Resorts Corp.; and ATN Holdings, Inc. “B”. — Victor V. Saulon