MIXED. The local bourse's main index ended in the negative territory Wednesday (June 14, 2023) after the report about the slowdown of US inflation rate to 4 percent last May from 4.9 percent the previous month, increasing the possibility of a pause in the Federal Reserve's rate hiking cycle. On the other hand, the peso ended little changed against the US dollar. (PNA graphics)
MANILA – The further slowdown of the United States’ inflation in May made investors turn to the US anew, resulting in the negative close of most counters in the local bourse but the peso barely moved against the greenback.
The Philippine Stock Exchange index (PSEi) shed 1.12 percent, or 73.2 points, to 6,434.06 points.
All Shares followed with a decline of 0.87 percent, or 30.21 points, to 3,437.04 points.
Most of the sectoral gauges also ended the day down, led by Services after it slipped by 2.04 percent.
Trailing behind were Property, 1.59 percent; Holding Firms, 1.27 percent; Mining and Oil, 1.13 percent; and Financials, 0.55 percent.
Only the Industrial index managed to end with gains although minimal at 0.003 percent.
Volume reached 1.16 billion shares amounting to PHP11.45 billion.
Decliners led advancers at 118 to 72 while 41 shares were unchanged.
“Investors pulled back into the US, as the latest inflation data showed that price pressures continued to slow down in May, fueling optimism that the Fed (Federal Reserve) may skip a rate hike in upcoming policy-setting meeting,” said Luis Limlingan, Regina Capital Development Corp. head of sales.
The US inflation rate posted its slowest since March 2021 when it decelerated to 4 percent on an annual basis in the fifth month this year compared to 4.9 percent in April.
On a month-on-month basis, the rate of price increases jumped by 0.1 percent, slower than the 0.4 percent rise in the previous month.
“Following the report, traders increased their bets that the Fed will keep rates unchanged on Wednesday after hiking at 10 consecutive meetings,” Limlingan said, referring to the June 13-14 meeting of the Federal Open Market Committee.
Meanwhile, oil prices went up by 3 percent to USD74.06 per barrel for Brent crude and by 3.1 percent to USD69.19 per barrel for the West Texas Intermediate (WTI), “recovering from steep losses the previous session after China’s central bank lowered a short-term lending rate for the first time in 10 months.”
Meanwhile, the local currency ended the day at 55.94 from 55.95 on Tuesday.
It opened the day at 55.88, better than its 56.09 start in the previous session and traded between 56.015 and 55.88, resulting in an average of 55.97.
Volume increased to USD881.9 million from the previous session’s USD834.75 million.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the peso was little changed ahead of the announcement of the Federal Reserve decision.
He said the slowdown in US inflation rate gives the Fed “room to take a pause from interest rate hikes later today.”
For Thursday, Ricafort forecast the peso to trade between the 55.85 and 55.95 levels against the US dollar. (PNA)
