RATE HIKE FEARS. Continued concerns about the Federal Reserve’s funds rate increases again pulled down the local bourse's main index on Tuesday (Aug. 23, 2022) as investors take profit. However, the peso gained against the US dollar partly on the greenback's correction. (PNA file photo)
MANILA – Profit-taking, still due to additional Federal Reserve rate hike concerns, resulted in another negative close for the local stock barometer on Tuesday but the local currency gained against the US dollar.
The Philippine Stock Exchange index (PSEi) shed 1.28 percent, or 86.03 points, to 6,618.38 points.
All Shares followed with a decline of 1.29 percent, or 46.02 points, to 3,531.91 points.
The Mining and Oil index posted the biggest drop among the sectoral indices after it slipped by 2.89 percent. Trailing behind were Property, 1.84 percent; Holding Firms, 1.63 percent; Services, 1.19 percent; Industrial, 1.10 percent; and Financials, 0.08 percent.
Volume was thin at 972.68 million shares amounting to PHP5.67 billion.
Decliners led advancers at 151 to 37, while 40 shares were unchanged.
“Local shares were sold down once again as the summer rally faded amid mounting rate hike concerns,” said Luis Limlingan, Regina Capital Development Corp. head of sales.
On the local front, Limlingan said the local bourse’s main index slipped anew as “profit-takers continued to emerge, sending the PSEi to retreat to the 6,600 level after staying in the overbought region for last week.”
He said oil futures declined after “Saudi’s (Saudi Arabia) energy minister said OPEC+ could cut production to confront market challenges.”
He added that Brent crude oil futures went down by 0.5 percent to USD96.28 per barrel and the West Texas Intermediate by 0.3 percent to USD90.50 per barrel.
On the other hand, the peso ended the day better against the US dollar at 56.07 from 56.21 on Monday.
It opened the day at 56.25, a depreciation compared to the 56.10 start in the previous session.
It traded between 56.26 and 56.05, resulting in an average of 56.201.
Volume reached USD 864.05 million, higher than the USD804.95 million on Monday.
Rizal Commercial Banking Corp. chief economist Michael Ricafort, in a reply to questions from the Philippine News Agency, attributed the peso’s performance to “healthy correction after weakening for seven straight days”, with the latter traced to anticipation for additional hikes in the Federal Reserve’s key rates.
“The markets anticipate the yearly Fed monetary policy symposium/Jackson Hole forum in Wyoming (from Aug. 25 to 27, 2022) on possible new leads on the pace of Fed rate hikes/hawkish Fed in view of the need to further bring down still elevated US inflation/CPI (consumer price index); as well as the recent increase in US Treasury yields,” he said.
Ricafort said the yield of the benchmark 10-year US Treasury posted a one-month high recently after hitting 3.01 percent on the back of hawkish signals from some Fed officials.
Another boost to the local currency is the government’s 5.5-year retail treasury bond (RTB) offering, which fetched an average rate of 5.579 percent during the rate-setting auction on Tuesday.
Ricafort said the RTB offering “could entail some foreign buyers/investors and could siphon off hundreds of billions of pesos in excess liquidity from the financial system, thereby partly triggering some healthy profit-taking in some parts of the local financial markets after hefty gains recently (such as from US dollars), as some investors shift some of their funds to RTB investments with relatively higher yields compared to recent years.”
He forecast the currency pair to trade between 55.95 and 56.15 on Wednesday. (PNA)
