Share prices ended lower Thursday as investors opted to hold on to cash after the US Fed raised rates by 75 basis points and the Bangko Sentral ng Pilipinas by another 50 basis ponts.
The Philippine Stock Exchange index (PSEi) was down 39.98 points, a 0.63 percent drop to 6,301.71.
The broader all shares index was down 29.28 points or 0.86 percent to 3,356.24.
Losers edged gainers 156 to 41 with 34 stocks unchanged. Trading turnover reached P5.92 billion.
Luis Limlingan, managing director at Regina Capital and Development Corp. said the market struggled to find a footing Thursday as traders weighed the new round of rate hikes.
“The Fed pledged to keep its aggressive stance in pushing the interest rates to combat inflation until it reaches a terminal rate of 4.6 percent in 2023,” he said.
Most actively traded International Container Terminal Services Inc. was steady at P181.
Ayala Land Inc. was down P1.40 to P25.55. Converge ICT Solutions Inc. was down P1.90 to P14.92. SM Investments Corp. was up P1 to P819.50. San Miguel Corp. San Miguel Corp. was down P0.35 to P97.65. Emperador Inc. was down P0.10 to P20.25. SM Prime Holdings Inc. was down P0.70 to P34.20. Universal Robina Corp. was down P1.70 to P115.30. Monde Nissin Corp. was down P0.54 to P12.96.
“The 2Y yield already running ahead of the Fed funds rate, and some safe-haven flows amid geopolitics might have been factors preventing the yield from reacting more to the FOMC outcome earlier,” Frances Cheung, rates strategist at OCBC Bank, said in a note.
Higher yields strengthen the dollar, boosting the appeal of Treasury notes and the greenback, and in turn weigh on riskier Asian assets.
“More aggressive rate hikes will further hurt growth while keeping inflation expectation anchored; such inflation-growth matrix shall limit the upside to the 10Y yield at least in the near term,” Cheung said.
The US Federal Reserve delivered its third straight rate increase of 75 bps Wednesday night and signaled more hikes to come, underscoring its resolve not to let up in its fight to contain inflation.
Bank Indonesia (BI) is expected to raise its key interest rate another 25 basis points at its meeting later in the day,
The Bank of Japan remained an outlier among a global wave of central banks that are withdrawing stimulus to battle inflation, as it maintained ultra-low interest rates and dovish policy guidance on Thursday at a policy meeting.
Investors in Asia are also awaiting a policy decision from the central bank in Taiwan, with a mild interest rate hike expected, according to economists polled by Reuters. The island’s economic growth, exports and inflation are all slowing. –with Reuters
