Higher inflation weighs down share prices
Share prices halted a three-day rally yesterday as a higher-thanexpected inflation print for July pulled down the market.
“The PSE index dropped 77.61 points (down 1.2 percent) to close at 6,405.50 after Philippine inflation data for July clocked in at 6.4 percent, higher than the consensus estimate of 6.1 percent,” AB Capital Securities said in a commentary.
It added that value turnover jumped to P12 billion amid the last day of PSE rebalancing while foreign flows turned negative at P42 million.
The broader All Shares index tumbled by 29.70 points or 0.86 percent to close at 3,432.06.
Claire Alviar of Philstocks Financial said the local bourse dropped after three straight days of market rally,as July’s inflation rate quickened to 6.4 percent, printed at the upper end of the BSP’s forecast and higher than June’s 6.1 percent.
Luis Limlingan of Regina Capital said shares traded on higher than average volume as index funds rebalanced their position to reflect the new constituents, mainly the entry of Semirara Mining and Power Corp. in the index.
Traders also took some gains on the last trading day of the week to avoid any uncertainties over the weekend.
The market is also awaiting the jobs report from the US for further clues about the US Fed’s path of rate hikes and the state of the economy.
Around Asia, stock markets rose ahead of an update on the US jobs market while the Federal Reserve weighs whether more rate hikes are needed to cool surging inflation.
Investors were looking ahead to monthly US employment numbers for possible signs of weakness that might prompt the Fed to decide it needs to ease off on rate hikes to cool inflation. Other data suggest the economy is slowing, which should reduce pressure for prices to rise.
“There is likely to be particular focus on the resilience of jobs growth” after an uptick in unemployment claims,” said Anderson Alves of ActivTrades in a report.
Investors worry rate hikes by the Fed and other central banks in Europe and Asia to tame inflation that is running at multi-decade highs might derail economic growth.