PHILIPPINE SHARES slumped on Wednesday as the peso continued to hit new lows, with the dollar finding support from strong US services sector data that could give the US Federal Reserve a reason to continue raising benchmark interest rates aggressively.
The bellwether Philippine Stock Exchange index (PSEi) declined by 155.52 points or 2.31% to close at 6,554.08 on Wednesday, while the broader all shares index lost 60.88 points or 1.71% to 3,490.07.
“Stocks moved lower today as strong economic data in the US brought concerns that the US Fed can be aggressive in raising interest rates,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message on Wednesday.
“All these are causing investors to go on strike as stocks become less attractive against risk-free assets that are seeing rising yields,” Mr. Vistan said.
A survey from the Institute for Supply Management showed the US services industry picked up in August for the second straight month. The non-manufacturing purchasing managers’ index edged up to 56.9 last month from 56.7 in July, above the 50 mark that separates expansion from contraction.
“The local bourse plunged 155.52 points or 2.31% to 6,554.08 amid the depreciating peso and negative sentiment abroad. So far, the peso is depreciating, trading at P57 levels. This has negative effects on our country, especially since we rely heavily on imports, making goods more costly,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.
The local unit closed at another record low of P57.135 against the dollar on Wednesday after stock market trading ended. The peso tested new lows throughout the session, with its intraday worst at P57.33 and its best showing at P57, which was its Tuesday finish.
“Moreover, weak global economic growth weighs on sentiment after China’s trade data missed estimates while recession fears grow in Europe,” Ms. Alviar added.
All sectoral indices ended lower on Wednesday. Holding firms sank by 205.73 points or 3.17% to 6,273.43; financials lost 38.81 points or 2.38% to end at 1,588.47; mining and oil decreased by 270.93 points or 2.28% to 11,577.06; property went down by 51.70 points or 1.72% to 2,947.43; services shaved off 24.87 points or 1.46% to close at 1,677.45; and industrials declined by 93.22 points or 0.94% to 9,762.38.
Value turnover went up to P4.85 billion with 916.47 million shares on Wednesday changing hands from the P4.69 billion with 562.76 million issues seen the previous day.
Decliners overwhelmed advancers, 115 against 59, while 50 names closed unchanged.
Net foreign buying declined to P42.72 million on Wednesday from the P526.37 million seen on Tuesday.
AB Capital Securities’ Mr. Vistan put the PSEi’s initial support at 6,550 and resistance at 6,800. — J.I.D. Tabile