Share prices ended mixed Wednesday on investor concerns after the US Fed reiterated its hawkish stance against inflation, causing Wall Street to drop overnight.
The peso closed down.
The Philippine Stock Exchange index was up 6.37 points, a 0.1 percent hike to 6,711.49.
The broader All shares index was down 4.55 points or 0.13 percent to 3,585.66.
Losers edged gainers 120 to 72 with 46 stocks unchanged. Trading turnover reached P5.24 billion.
The peso closed at 55.32 to the dollar, down from 55 on Tuesday. The currency opened at 55.30 and hit a high of 55.24 and a low of 55.48. Trading turnover reached $1.02 billion.
In a testimony to the US Congress overnight, Fed chairman Jerome Powell flagged that a string of stronger-than-expected economic data indicated that “the ultimate level of interest rates is likely to be higher than previously anticipated.”
The remarks sent short-term rate expectations higher, with traders now betting on an almost 70 percent chance of a 50 basis point rate hike in March, according to CME’s FedWatch tool, up from about 30 percent a day earlier.
“The market’s repricing of the higher peak of US Fed Funds Target Rate and shallower Fed rate cuts in the second half has led to a snap back in the US dollar and a strong rebound in short-term US Treasury yields, leaving Major FX and Asian FX space to turn out to be more ferocious than we had anticipated,” analysts at OCBC said in a note.
Central banks globally will now look to tighten monetary policy further to rein in sticky inflation, which in turn will spur volatility in Asian emerging markets, Jeff Ng, a senior currency analyst at MUFG, said highlighting the implications of Powell’s stance.
Investors will keep a close watch on the US jobs report for February, due on Friday, for clues on the size of the Fed’s future interest rate hikes.
Asian currencies were further challenged by the greenback gaining strength suddenly. The US dollar index, which measures the US currency against a basket of six major units, jumped 1.3 percent overnight to a three-month peak at 105.65.
Luis Limlingan, managing director at Regina Capital and Development Corp., noted the market still managed to “climb,” still riding on the momentum of better-than-expected inflation print for February still.
“Equities may have been able to perform better if not weighed by a US selloff fueled by Fed Chair Jerome Powell’s comments indicating interest rates may need to go higher for longer,” Limlingan said.
Most actively traded Globe Telecom Inc. was down P11 to P1,839. BDO Unibank Inc. was up P0.50 to P128. International Container Terminal Services Inc. was up P3 to P211. Ayala Land Inc. was down P0.15 to P28.15. ACEN Corp. was down P0.18 to P6.52. Universal Robina Corp. was steady at P6.52. Robinsons Land Corp. was down P0.28 to P14.64. Metro Pacific Investments Corp. was down P0.20 to P4.19. Ayala Corp. was down P4 to P641. Bank of the Philippine Islands was up P0.50 to P109.
