PSEi plummets, peso falls ahead of Fed move

THE stock market plunged and the peso also weakened on Tuesday ahead of an expected US Federal Reserve (Fed) rate hike and as the Bangko Sentral ng Pilipinas said inflation could have gone even higher last month.

The benchmark Philippine Stock Exchange index (PSEi) lost 177.72 points, or 2.55 percent, to close at 6,793.25 while the peso ended the day at P54.64 versus the dollar, down 9.5 centavos from Monday.

The broader All Shares, meanwhile, dropped by 69.56 points, or 1.90 percent, to 3,590.40.

“The local stock market gauge ... corrected lower for the second straight day after the Bangko Sentral ng Pilipinas estimated January 2023 inflation at 7.5-8.3 percent, which is still elevated after the new 14-year high of 8.1 percent in December 2022,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

“Moreover, this was also ahead of the widely expected but smaller 0.25 [percentage point] Federal Reserve rate hike on Feb. 1, 2023 that could also be matched locally on Feb. 16, 2023,” he added.

Regina Capital Development Corp. Managing Director Luis Limlingan said the “Philippine shares continued to decline ahead of the start of the Fed’s latest policy meeting where investors expect the

US Federal Reserve to raise rates by 25 basis points on Wednesday, the day after by half-point increases by the Bank of England and European Central Bank.”

“Any deviation from that script would be a shock,” he added.

“Traders will also monitor commentary for clues into how much further the Fed intends to hike, or when it plans to cut rates. Back home, profit taking continued as the last trading day of January drew to a close,” Limlingan continued.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco, meanwhile, noted that “the exit of foreign funds contributed to the decline with net outflows at P812.43 million.”

The peso opened trading at P54.65 and ranged from P54.47 to P54.7. Total volume reached $984.31 million, higher than the previous session’s $687.87 million.

At the stock market, all sectoral indices closed in the red with mining and oil down the most by 3.63 percent.

A total of 1.54 billion shares worth P11.27 billion changed hands.

Decliners outnumbered advancers, 147 to 50, while 27 remained unchanged.