PHILIPPINE SHARES declined further on Thursday after the US Federal Reserve raised borrowing costs anew overnight and gave a hawkish outlook on rates, with the Bangko Sentral ng Pilipinas (BSP) also delivering another increase at its own policy meeting.
The benchmark Philippine Stock Exchange index (PSEi) went down by 39.98 points or 0.63% to close at 6,301.71 on Thursday, while the broader all shares index dropped by 29.28 points or 0.86% to 3,356.24.
“Stocks dropped as investors digested the Fed’s statement on their stance on interest rates and inflation. As expected, the Fed raised their benchmark rates by 75 basis points (bps), but maintained their goal of bringing down US inflation to 2% at all costs. All costs include taking the risk of pulling the US economy into a recession,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.
“The local bourse declined further by 39.98 points or 0.63% to 6,301.71 as the Fed raised interest rates by 75 bps, which brought negative sentiment to the market, while the BSP hiked rates by 50 bps to fight inflation,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.
“The Fed’s decision brought most equity markets into the red, especially with the expectation that they will remain aggressive for the rest of the year. At home, the BSP’s 50-bp rate increase could help the peso but high policy rates may temper demand,” Ms. Alviar added.
The US central bank on Wednesday hiked interest rates by 75 bps for a third straight time and signaled further increases as policy makers continue to battle inflation. This brought the Fed’s cumulative hikes for this year so far to 300 bps.
Meanwhile, the BSP on Thursday raised benchmark rates by 50 bps for a second straight meeting amid broadening price pressures. It has now hiked borrowing costs by a total of 225 bps since May.
The majority of sectoral indices ended in the red on Thursday, except for financials, which rose by 10.79 points or 0.69% to finish at 1,563.73.
Meanwhile, property declined by 78.89 points or 2.80% to 2,734.04; industrials went down by 136.11 points or 1.47% to 9,098.61; mining and oil dropped by 164.13 points or 1.45% to end at 11,112.50; services fell by 6.20 points or 0.37% to 1,634.39; and holding firms retreated by 1.27 points or 0.02% to close at 6,133.75.
Value turnover went up to P5.92 billion with 641.94 million shares changing hands from the P5.42 billion with 569.25 million issues traded the previous day.
Decliners overwhelmed advancers, 156 to 41, while 34 names closed unchanged.
Still, net foreign selling declined to P204.57 million on Thursday from P421.14 million on Wednesday.
AB Capital Securities’ Mr. Vistan placed the PSEi’s support at 6,100 and resistance at 6,500. — Justine Irish D. Tabile