WAIT-AND-SEE STANCE. Concerns on elevated inflation rate and the rate adjustment decisions by monetary authorities here and in the United States resulted in the negative close of both the local bourse’s main index and the peso on Friday (Feb. 17, 2023). Economists said investors remain on wait-and-see stance for the key rate decisions of the Bangko Sentral ng Pilipinas (BSP) and the Federal Reserve, both of which are expected to raise their respective rates by at least 50 basis points this year. (PNA graphics)
MANILA – The local stock barometer ended the week lower on inflation concerns and central banks’ rate hiking path and this was mirrored by the local currency.
The Philippine Stock Exchange index (PSEi) shed 0.54 percent, or 36.89 points, to 6,779.02 points.
All Shares followed with a decline of 0.48 percent, or 17.39 points, to 3,621.69 points.
Most of the sectoral gauges also finished the day down, led by Property after it fell by 1.75 percent.
Industrial trailed after slipping by 0.87 percent, along with Holding Firms, 0.83 percent, and Financials, 0.02 percent.
On the other hand, Services rose by 0.79 percent and Mining and Oil by 0.04 percent.
Volume reached 851.14 million shares amounting to PHP5.68 billion.
Decliners led advancers at 123 to 56, while 39 shares were unchanged.
“Local equities closed in the red amid concerns of stubbornly high inflation metrics and Fed (Federal Reserve) commentaries on the pacing of potential rate hikes,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.
Citing reports, Limlingan said St. Louis Fed President James Bullard favored a 50 basis points increase in the Federal Reserve funds rate during the Jan. 31 to Feb. 1, 2023 meeting of the Federal Open Market Committee (FOMC), and is open to a hike of the same rate for the March 2023 meeting.
The FOMC hiked the Fed’s key rates by 25 basis points.
US’ consumer price index (CPI) further slowed to 6.4 percent last January from the previous month’s 6.5 percent.
On the local front, the Bangko Sentral ng Pilipinas’ (BSP) policy-making Monetary Board (MB) hiked by 50 basis points the central bank’s key rates on Thursday.
This, after citing the higher-than-expected domestic inflation last January, which posted a new 14-year high of 8.7 percent, and expectations of sustained elevated rate of price increases given the jumps in prices of food, among others, in the domestic and international market.
Limlingan said the PSEi slipped partly after investors cashed in on their portfolio following the widely-expected BSP rate hike.
Meanwhile, oil prices in the international market went down a bit “as the greenback strengthened on worries that rising interest rates would slow the economy and cut fuel demand.”
Limlingan said the price of Brent crude went down by 0.2 percent to USD85.38 per barrel and the West Texas Intermediate (WTI) by 0.6 percent to USD78.59 per barrel.
Meanwhile, the local currency weakened against the US dollar and closed the day at 55.24 from its 55.12 close on Thursday.
It opened the day at 55.25 and traded between 55.335 and 55.15. The average level for the day stood at 55.252.
Volume went down to USD878.3 million from the previous day’s USD1.14 billion.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the negative close of the PSEi, concerns on the path of inflation and central banks key rates and geopolitical issues between the US and China contributed to the peso’s weakness.
He forecasts the peso to trade between 55.00 to 55.50 against the US dollar next week, with the range for Monday projected to between 55.10-55.30. (PNA)
