PSEi down 1.66% on impending Fed hike

THE Philippine Stock Exchange index (PSEi) plunged by 106.77 points, or 1.66 percent, on Wednesday to close at 6,341.69 as investors expect an aggressive policy rate hike from the US Federal Reserve (Fed) and Bangko Sentral ng Pilipinas (BSP).

“Most investors were on the sidelines, waiting for the decision of the Fed, and due to the fact many were anticipating a hawkish stance, the peso depreciated further, ending at the P58 level, according to foreign exchange trading,” Claire Alviar, research associate at Philstocks Financial Inc., said.

She added this weighed on the performance of the market since if the Fed will be more aggressive than the BSP, the peso may weaken further that would have an adverse impact on the Philippine economy.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the PSEi’s latest decline was in line with the latest overnight decline in the US stock markets for the third day in four trading days which also led to higher US Treasury yields.

“The benchmark 10-year US Treasury yield posting new 11-year highs at 3.52 percent could lead to higher financing costs again for some listed companies,” Ricafort added.

For his part, Regina Capital Development Corp. Managing Director Luis Limlingan added that the two-year US Treasury note yield surged as high as 3.99 percent, its highest level since 2007. The yield on the 10-year Treasury briefly touched 3.6 percent, the highest since 2011.

Meanwhile, oil prices dipped yesterday as the dollar stayed strong and investors anticipated more central bank interest-rate hikes designed to quell inflation. Brent crude futures ended the day at $90.23 per barrel, down 1.9 percent. On the other hand, the US West Texas Intermediate crude futures dropped 1.49 percent, settling at $84.45 per barrel.

Wednesday’s total value was at P5.42 billion, with 569,251,426 shares in total volume with 69,504 trades made.

Net market value turnover was recorded at P5.21 billion.

Except for mining and oil that inched up by 0.18 percent, financials had the largest loss of 2.49 percent.

Decliners again overwhelmed advancers, 151 to 39, while 33 securities remained unchanged.

Semirara Mining and Power Corp. was the biggest gainer with 1.85 percent, while Robinsons Land Corp. was at the bottom, losing 4.35 percent.