MANILA – Following the 50 basis points hike in the Federal Reserve’s key rates on Thursday (Manila time), the local main equities index slipped on Thursday but the peso kept its footing.
The Philippine Stock Exchange index (PSEi) shed 0.73 percent, or 48.27 points, to 6,566.80 points.
All Shares trailed with a decline of 0.54 percent, or 18.68 points, to 3,430.89 points.
All the sectoral indices also ended the day in the negative territory, led by Services after it fell by 1.39 percent.
It was followed by Property, 1.24 percent; Financials, 0.98 percent; Mining and Oil, 0.68 percent; Industrial, 0.41 percent; and Holding Firms, 0.02 percent.
Volume rose to 2.06 billion shares amounting to PHP7.27 billion.
Decliners led advancers at 101 to 71, while 45 shares were unchanged.
“Philippine shares put a pause in their winning streak as Wall Street digested the Fed’s latest rate hike decision,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.
After its two-day meeting that ended on Dec. 14, the Fed announced a widely expected 50 basis points increase in the Federal Reserve funds rate and signaled that the upward adjustments will continue next year as it tames the four-decade high inflation rate.
To date, the Fed’s key rates are between 4.25 to 4.5 percent, the highest since December 2007.
A similar widely expected hike was announced by the Bangko Sentral ng Pilipinas (BSP) after the trading in the local bourse, with the policy increase aimed at addressing the elevated domestic inflation rate.
The BSP’s overnight reverse repurchase (RRP) rate is now at 5.5 percent, matching the December 2008 level or during the global financial crisis.
The Fed rate hike resulted in the rise of oil prices in the international market, with the Brent crude oil at USD82.70 per barrel and the West Texas Intermediate (WTI) at USD77.28 per barrel.
Meanwhile, the peso ended sideways against the US dollar at 55.685 from 55.745 a day ago.
It opened the day at 55.73 and traded between 55.84 and 55.61. The average for the day stood at 55.742.
Volume rose to USD1.06 billion from day-ago’s USD731.72 million.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort traced the peso’s performance during the day partly to the hikes in the Fed and the BSP’s key rates.
He also attributed the peso’s improvement to the weakening of the US dollar against major currencies and the decline in the yield of US’ 10-year Treasury, which ran counter following the Fed rate hike.
“It is important to note that gains picked up in the local financial markets (stock market, peso exchange rate, local bonds) since US inflation/CPI (consumer price index) data started eased/improve meaningfully since November 10, 2022 and again eased further/improved on December 13, 2022,” he added.
Ricafort also cited the net foreign buying in the local bourse during the day.
He said the peso has eased by 1.5 percent against the US dollar since the start of the month.
For Friday, the currency pair is expected to trade between 55.55 to 55.75. (PNA)