RECESSION WORRIES. Fears of a global recession result in the negative close of both the Philippines' main stocks index and the peso on Thursday (July 7, 2022). The peso even weakened to 56-level against the US dollar. (PNA file photo)
MANILA – A more hawkish stance from the Federal Reserve, as shown by the minutes of the Federal Open Market Committee’s (FOMC) meeting last June, ended the local bourse’s main index’s rally on Thursday and further weakened the peso.
After rising for several days, the Philippine Stock Exchange index (PSEi) shed 1.44 percent, or 92.69 points, to 6,352.32 points.
All the other counters also finished the day on the red, with the All Shares down by 1.09 percent, or 37.51 points, to 3,405.39.
Industrial led the sectoral indices after it fell by 2.31 percent and was trailed by the Services, 1.97 percent; Mining and Oil, 1.80 percent; Financials, 1.62 percent; Property, 1.50 percent, and Holding Firms, 0.26 percent.
Volume reached 708.51 million shares amounting to PHP4.7 billion.
Decliners led advancers at 103 to 68 while 51 shares were unchanged.
“Traders cashed in the Philippine market after successive sessions in the green following the release of the FOMC’s June meeting minutes,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.
Citing the FOMC meeting minutes, Limlingan said US monetary authorities kept their firm resolve to address the rising inflation rate in the US and the possibility of up to 75 basis points increase in the Fed’s key rates on their July 26-27, 2022 meeting.
He said investors were also on a wait-and-see stance on the scheduled release later in the day of the weekly jobless claims in the US as well as the international trade data.
Also, he said oil prices fell to a 12-week low due to global recession fears.
He said Brent crude oil futures slipped by 2 percent to USD100.69 per barrel, while US West Texas Intermediate (WTI) futures declined by 1 percent to USD98.53 per barrel.
The local currency dipped to 56.06 against the US dollar from its 55.67 close a day ago.
It opened the day at 55.9, a slip from its 55.42 start in the previous session.
It traded between 55.78 and 56.09, resulting in an average of 55.909.
Volume reached USD1.11 billion, lower than the USD1.25 billion on Thursday.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the local unit finished the day at its lowest since September 27, 2005, when it closed at 56.295.
Among the factors that affected the local currency during the day include the drop of the country’s foreign reserves to one-and-a-half low of USD101.98 billion as of end-June 2022 and the strengthening of the US dollar, following the release of the FOMC meeting minutes for June 2022, he said.
These factors are, however, countered by the decline of oil prices in the international market and hints for more rate increases by the Bangko Sentral ng Pilipinas (BSP), he said.
Ricafort forecasts the peso to trade between 55.85 – 56.15 to a dollar on Friday. (PNA)
