MANILA – Risk-off sentiments continue to worry investors resulting to net foreign selling and another negative close of the Philippines’ main equities gauge and the weakening of the local currency to the 53-level against the greenback.
The Philippine Stock Exchange index (PSEi) shed 3.38 percent, or 228.55 points, to 6,530.04 points.
It was tracked by all the other counters, with the All Shares down by 2.46 percent, or 88.73 points, to 3,511.93 points.
Property registered the biggest drop among the sectoral indices after it fell 4.20 percent and was trailed by the Holding Firms, 3.62 percent; Mining and Oil, 3.37 percent; Financials, 2.93 percent; Industrial, 2.32 percent; and Services, 1.87 percent.
Volume was thin at 661.18 million shares amounting to PHP6.02 billion.
Decliners led advancers at 131 to 45 while 40 shares were unchanged.
“Philippine shares plunged deep into the red ahead of the US May CPI (consumer price index) report tonight. Investors are looking to see if inflation has peaked or if the Fed(eral Reserve) will need to be even more aggressive to tamp down price increases,” Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales, said.
He said consensus is for the US’ May inflation rate to be at 8.3 percent for the main index, same as the previous month, and 5.9 percent for the core index.
Other factors that drive the day’s equities trading include the rise in US’ initial jobless claims by 27,000 to 229,000 in the week ending June 4, 2022, and the 54.07 percent year-on-year jump in the Philippines’ trade deficit for May 2022 based on preliminary data.
Relatively, the peso depreciated to its nearly three and a half years to 53.00 against the US dollar from the previous session’s 52.95.
It opened the day sideways at 52.97 from 52.95 on Thursday.
It traded between 52.925 and 53.00, bringing the day’s average to 52.951.
Volume rose to USD949.3 million from the previous day’s USD732.62 million.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the local currency closed to its weakest since December 20, 201, when it closed at 53.10 to a US dollar.
He attributed this to another 2022 global growth forecast cut, this time by the Organisation for Economic Co-operation and Development, following the same move from the World Bank.
Other factors that contributed to the depreciation of the local currency include the rise in US Treasury yields to above 3 percent for long-term tenors, wait-and-see stance on the May 2022 US inflation rate, expectations for more hikes in the Federal Reserve rates, and further increase in global oil prices.
He said the peso’s next resistance level is between 53.25-53.50 while immediate support is between 52.70-52.80 levels. (PNA)
