PSEi drops on lingering key rate hike concerns in US

REUTERS

SHARES DECLINED further on Wednesday on lingering rate hike concerns following the release of new US labor market data.

The bellwether Philippine Stock Exchange index (PSEi) went down by 106.62 points or 1.59% to close at 6,583.65 on Wednesday, while the broader all shares index went down by 47.78 points or 1.34% to 3,500.72.

“The local bourse extended its decline, losing 106.62 points or 1.59% to 6,583.65 following the drop in US markets amid worries that the US Federal Reserve will continue with its aggressive policy tightening,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The PSEi breached the 6,600 support level ending the day at 6,583.65… on the sustained decline of US indices driven by US Fed Chairman [Jerome H.] Powell’s remarks causing a negative spillover effect on our local bourse,” Unicapital Securities, Inc. Equity Research Analyst Ralph Jonathan B. Fausto said in a Viber message.

“With the US Fed continuing its policy tightening, this puts pressure on the BSP (Bangko Sentral ng Pilipinas) to act in response by raising its policy rates… This prompted continued selling pressures which led to today’s 1.59% decline,” Mr. Fausto said on Wednesday.

US stocks dropped for a third straight session on Tuesday as an increase in job openings fueled Fed rate hike worries.

The Dow Jones Industrial Average fell by 308.12 points or 0.96% to 31,790.87; the S&P 500 lost 44.45 points or 1.10% to end at 3,986.16; and the Nasdaq Composite dropped by 134.53 points or 1.12% to 11,883.14.

Job openings in the US increased by 199,000 to 11.239 million on the last day of July, according to the Labor department’s Job Openings and Labor Turnover Survey released on Tuesday, pointing to extremely tight labor market conditions.

On Friday, Mr. Powell said the Fed may keep rates high for longer as it seeks to battle rising inflation, fueling recession fears.

BSP Governor Felipe M. Medalla earlier said they will need to respond if the Fed’s tightening continues to be aggressive.

Back home, the majority of sectoral indices ended in the red except for property, which climbed by 29.37 points or 0.98% to 3,024.91.

Meanwhile, holding firms declined by 225.20 points or 3.5% to 6,200.19; services dropped 26.73 points or 1.56% to 1,676.95; mining and oil went down by 120.72 points or 1.02% to 11,631.58; financials gave up 14.70 points or 0.90% to end at 1,606.85; and industrials lost 83.58 points or 0.85% to close at 9,739.44.

Decliners outnumbered advancers, 128 versus 67, while 42 names closed unchanged.

Value turnover increased to P8.87 billion on Wednesday with 1.45 billion changing hands from the P5.98 billion with 1.26 billion issues seen on Tuesday.

Net foreign selling climbed to P287.46 million on Wednesday from the P37.36 million seen the previous trading day.

Mr. Fausto put the PSEi’s support at 6,400-6,500 and immediate resistance at the 6,750 level. — Justine Irish D. Tabile