Stocks fall after MSCI index rebalancing

The local stock market tumbled after the MSCI index rebalancing as well as due to lingering concerns over rate hikes.

The benchmark Philippine Stock Exchange Composite index (PSEi) finished at 6,556.20, down 43.14 points or 0.65 percent as investors adjusted their portfolios due to the MSCI index rebalancing.

The broader All Shares index slipped to 3,527.17, down by 5.08 points or 0.14 percent.

“The local equities continued to dampen as we closed the last trading day for the month amid the releases of the corporate earnings. The MSCI rebalancing resulted in a bloodbath,” Regina Capital said.

The sectoral gauges were mixed with financials, industrial and mining and oil ending in the green. The rest of the sectors were down.

Total value turnover hit P21 billion. Market breadth was positive, 117 to 80 while 40 issues were unchanged. Meanwhile, shares were mostly higher in Asia yesterday after Wall Street benchmarks clawed back some losses from their worst week since early December.

Stocks have come under selling pressure as analysts raised forecasts for how high the Federal Reserve will take interest rates and how long it will keep them there to tame inflation that has failed to fall as much as expected given strong jobs growth and other signs of resilience in the economy.

Economies around the world have remained more resilient than feared, with China loosening its business-damaging anti-COVID restrictions and Europe avoiding a worst-case energy crisis.

Stocks have struggled in February after a strong start to the year. Robust economic data help calm fears that a recession may be imminent given the dampening impact of more costly borrowing on spending by consumers and businesses.

But they likely mean a longer spell of higher interest rates. The heightened expectations for rates have been most evident in the bond market, where yields have shot higher in recent weeks.

Earlier, analysts thought the Fed might soon ease back. Now the expectation is that it might raise rates above 5.25 percent. The Fed’s key overnight rate is now in a range of 4.50 percent to 4.75 percent, up from virtually zero at the start of last year.