DOWN. Expectations for a hike in the Federal Reserve's key rates resulted in the negative close of both the local bourse's main index and the peso on Friday (July 7, 2023). This, after the latest job creation report from the US exceeded expectations when the June 2023 figure rose 497,000, more than double than estimates. (PNA graphics)
MANILA – Anticipations for another hike in the Federal Reserve’s key rates following indications that the US labor market remains firm resulted in the negative close of the local bourse’s main index as well as the peso on Friday.
The Philippine Stock Exchange index (PSEi) dipped 1.47 percent, or 95.23 points, to 6,379.03 points.
All other counters also ended the day in the negative territory, with All Shares down by 0.97 percent, or 33.65 points, to 3,422.28 points.
Holding Firms and Property led the sectoral indices in terms of losses after both slipped by 1.93 percent. These were followed by Financials, 1.37 percent; Industrial, 0.49 percent; Services, 0.28 percent; and Mining and Oil, 0.26 percent.
Volume reached 444.77 million shares amounting to PHP3.1 billion.
Decliners led advancers at 122 to 61, while 41 shares were unchanged.
Luis Limlingan, Regina Capital Development Corporation (RCBC) head of sales, said the day’s PSEi performance had the same results as the US equities.
“The US market was dragged (down) following the better-than-expected jobs data, as it increased investors’ concerns over the direction of the interest rates,” he said.
Limlingan is referring to the US ADP Research Institute report about the private sector job creation for June 2023, which rose 497,000, more than double against market estimates.
He said gold prices also fell, with the spot gold price down by 0.38 percent to USD1,910.01 per ounce, “with the expectations of more rate hikes.”
Oil prices are in turn nearly flat at USD76.52 per barrel for the Brent crude and USD71.80 per barrel for the West Texas Intermediate (WTI) “as the tighter US crude supplies weighted down sentiment.”
Meanwhile, the local currency ended the week’s trade at 55.62 from day-ago’s 55.5, which Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said is the weakest for the week.
It opened the day at 55.65, down from its 55.51 start in the previous session.
It traded between 55.67 and 55.52, resulting in an average of 55.597.
Volume went down to USD1 billion from Thursday’s USD1.01 billion.
Ricafort traced the peso’s performance to investors’ wait-and-see stance for the release of US employment data.
He said the report will serve as “a source of new leads for the financial markets after recent hawkish central bank signals from the US and in other developed countries in a quest to fight/reduce inflation back to the target.”
For one, jobless claims for the week ending on July 1, 2023 rose by 12,000 to seasonally adjusted 248,000, the US Labor Department said.
As a result, the US dollar gained against other major currencies, with the peso-dollar rate correcting higher by 0.8 percent, Ricafort said.
He said the greenback also benefited from the US ADP Research Institute report about the private sector job creation.
Ricafort said “global market sentiment has been weighed lately by the increase in US Treasury yields” with the two-year tenor’s yield surpassing 5 percent, the highest since 2007 due to the ADP private sector job creation report.
For next week, the local currency is expected to trade between 55.30 and 55.80 against the greenback, with the range for Monday projected between 55.50 and 55.70. (PNA)
