Shares decline on hawkish Fed meeting minutes
SHARES SANK back to negative territory on Thursday, as hawkish tones from the United States Federal Open Market Committee (FOMC) prompted caution across global markets.
The main index shed 1.13% or 98.08 points to 8,515.57 yesterday, quickly reverting its stance after managing to post gains in the previous session.
The broader all-shares index likewise dropped 0.68% or 34.98 points to 5,087.19.
“Rising bond yields continued to assert pressure on stocks in Wall Street, and the last FOMC minutes from then Chairman Janet Yellen giving strong sell signals to the Philippine market today. With the FOMC minutes indicating a slightly hawkish tone to inflation and growth in the US, markets globally took a precautionary stance,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said.
Minutes of the FOMC’s meeting last Jan. 30-31 stated that rate hikes will be implemented, alongside the US’ increased economic growth that is also triggering faster inflation.
US markets took this news negatively, with the Dow Jones Industrial Average losing 0.67% or 166.97 points to 24,797.78. The S&P 500 index gave up 0.55% or 14.93 points to 2,701.33, while the Nasdaq Composite index was down 0.22% or 16.08 points to 7,218.23.
Most Asian indices likewise followed suit, trekking lower yesterday as investors turned cautious against the impending rate hikes.
Papa Securities Corp. noted that index heavyweight SM Investments Corp. ( SMIC) also pulled down the market after falling 5% intraday and closing 3.55% lower to P950 apiece. Villar-led firms Golden Haven, Inc., which has posted a dizzying ascent in previous days, finally snapped its rally, losing 11.11% to P290 each.
“Looking forward, it might be best to remain cautious given the current volatility. The possibility of sudden downturns in the US market is also still ever-present, more so that US treasury yields are on the rise,” Papa Securities trader Gabriel Perez said in an e-mail on Thursday.
Most sectoral indices also posted a negative turn, with the mining and oil sector posting the largest loss at 1.87% or 231.52 points to 12,098.54. Holding firms followed with a decrease of 1.63% or 143.63 points to 8,623.05. Property moved 1.05% or 41.30 points lower to 3,862.19; financials dipped 0.78% or 17.51 points to 2,201.45; while industrials slipped 0.67% or 76.93 points to 11,245.09.
The services counter was the lone advancer, albeit gaining just 0.16 point to 1,745.60.
A total of 2.96 billion issues switched hands for a total value turnover of P10.46 billion, higher than Wednesday’s P9.53 billion.
Decliners outpaced advancers, 136 to 77, as 49 names closed flat.
Foreign investors were sellers for the third straight day, disposing a net P389.87 million from their portfolios. This is lower than Wednesday’s net sales of P516.38 million. •