The country’s equities and forex markets closed lower yesterday, pressured by a firm US dollar and elevated bond yields as risk-off sentiment prevailed among investors due to fears interest rates would stay higher for longer.
The Philippine Stock Exchange index (PSEi) was down by 36.01 points, a 0.59 percent drop to 6,018.49. The broader All Shares index was down 22.81 points or 0.69 percent to 3,266.02.
Losers edged gainers 115 to 47 with 51 stocks unchanged. Trading turnover reached P3.06 billion.
The peso closed at 56.96 to the dollar, down from 56.75 on Wednesday. The currency opened at 56.93, hitting a high of 56.90 and a low of 56.975. Trading turnover reached $1.08 billion.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the peso is on its 11-month low at its current close, though it’s just several cents shy of its intraday low of 56.99 recorded on Sept. 6 and Aug. 14.
The South Korean won slipped 0.7 percent, leading the losses in Asian currency markets. The New Taiwanese dollar and Thai baht fell 0.4 percent and 0.3 percent, respectively.
The dollar index, which measures the strength of the greenback against six major rivals, rose 0.2 percent to 106.762.
The 10-year US Treasury yield, which serves as a crucial economic benchmark and influences borrowing costs, also surged as a five-year treasury bond auction saw weak demand and after data showed new home sales jumped in September.
The rise in US yields prompted concerns that global central banks may not lower interest rates anytime soon.
Meanwhile, a forecast by the US Commerce Department showed the US economy likely grew in the third quarter at the fastest pace of any quarter in nearly two years on the back of higher wages and spending.
“Markets are choppy this week,” said Christopher Wong, currency strategist at OCBC in Singapore. “Asian FX is hit by a triple whammy of higher rates, risk off as corporate earnings disappoint and higher oil prices due to worries over escalating geopolitical tensions.”
Official advance estimates showed South Korea’s economy grew in the third quarter at the same pace as in the previous quarter, beating market expectations.
Bank Indonesia (BI) is expected to hold interest rates at 6.00 percent until at least the middle of next year after a surprise 25 basis point hike last week to arrest the rupiah’s depreciation, a Reuters poll found on Thursday.
“Further upside risks for the rupiah could only be stemmed if it becomes clear that BI is engaging in another cycle of rate hikes,” Maybank analysts said.
Mikhail Philippe Plopenio, analyst at Philstocks Financial Inc., said investors took negative cues from Wall Street’s overnight drop as the US bond yields rise.
“Additionally, concerns over an off-cycle rate hike by the Bangko Sentral ng Pilipinas, which eventually materialized this afternoon as the BSP decided to increase the benchmark interest rate by 25 basis points, weighed on the market,” it said.
“The PSEi reached its lowest point of the year at 5,974.17 before returning above the 6,000 level in the second half of the session. Concerns over the ongoing conflict in the Middle East are keeping many on the sidelines as well,” he added.
Most actively traded BDO Unibank Inc. was steady at P120. Ayala Land Inc. was down P0.20 to P27.80. Bank of the Philippine Islands was down P1 to P99. International Container Terminal Services Inc. was steady at P201. Manila Electric Co. was down P10 to P360. Emperador Inc. was steady at P20.75. Metropolitan Bank and Trust Co. was down P1.70 to P52. SM Prime Holdings Inc. was down P0.10 to P30.10. Converge ICT Solutions Inc. was down P0.55 to P8.20. PLDT Inc. was down P4 to P1,231.
