Share prices ended lower Monday as risk aversion hit investors ahead of a number of Central Bank meetings this week. The peso closed higher.
The Philippine Stock Exchange index (PSEi) was down 111.35 points or 1.7 percent to 6,437.42. The broader all shares index also closed lower, by 48.41 points or 1.39 percent, to 3,426.
Losers edged gainers 132 to 51 with 51 stocks unchanged. Trading turnover reached P4.98 billion.
The peso closed at 57.40 to the dollar, up from 57.43 on Friday. The currency opened at 57.34, hitting a high of 57.325 and a low of 57.43. Trading turnover reached $508.4 million.
Asian currencies broadly declined on Monday as the Chinese yuan weakened further, while equities also fell ahead of a slew of central bank meetings this week, including a rate decision by the US Federal Reserve, Reuters reported.
Thailand’s baht, however, bucked the regional trend to strengthen 0.3 percent after the country’s central bank said last week it was ready to manage any excessive moves in the currency.
Malaysia’s ringgit hit a fresh 24-1/2-year low and Taiwan’s dollar hit its lowest level since September 2019.
“The Fed (meeting on rates) looks set to dominate the narrative on risk assets. Against this backdrop, a mood of caution is likely to prevail ahead of the FOMC (Federal Open Market Committee) meeting mid-week,” said Vishnu Varathan, Mizuho bank economist.
Currently, markets are pricing in at least another 75-basis-point increase for Wednesday’s FOMC meeting, and 19 percent odds of a super-sized full percentage point rise.
The yuan fell to trade on the weaker side of the psychologically critical 7 per dollar level, as economic worries and the possibility of more benchmark interest rate cuts loom on Tuesday.
The relentless ascent of the dollar and US yields have weighed heavily on riskier Asian assets, with several currencies hitting multi-year lows on Friday.
The Bank of Thailand said on Friday it was closely monitoring its currency and was ready to “take action when the baht moves in an unusually volatile way.” The baht hit its weakest level in nearly 16 years on Friday.
The Indian rupee edged up after the country’s central bank vowed to front-load rate hikes to tame stubbornly high inflation.
Aside from the Fed, Asia-focused investors will also be on the lookout for central bank meetings in Japan, Indonesia, Taiwan and the Philippines, as well as a decision on China’s loan prime rate. The week is also littered with inflation data from Japan, Singapore and Malaysia.
Bank Indonesia, the Bangko Sentral ng Pilipinas (BSP)and Taiwan’s central bank are all expected to hike interest rates this week, with Japan being the exception. The Bank of Japan has so far shown no sign of abandoning its uber-easy monetary policy despite the drastic slide in the yen.
The yen was down 0.3 percent at 143.32 on Monday.
“The effect of verbal interventions in the yen has faded, but a move in USD/JPY towards 145 could spark further concern from the Japanese authorities,” said Jessica Amir, market strategist at Saxo Capital Markets.
Claire Alviar, analyst at Philstocks Financial Inc., said investors opted to take profit ahead of the anticipated “possible aggressive policy rate hike” by both the Federal Reserve and the BSP when it meets this week.
“Also, a wider balance of payments deficit expectation of the BSP weighed on sentiment as this may weaken the peso further,” she said.
Most actively traded SM Investments Corp. was down P36 to P835. San Miguel Corp. was up P3.45 to P98.45. SM Prime Holdings Inc. was down P0.55 to P35.20. BDO Unibank Inc. was up P0.10 to P120.50. Ayala Land Inc. was down P0.55 to P28. Universal Robina Corp. was down P2.50 to P119.30. International Container Terminal Services Inc. was steady at P182. Solar Philippine Nueva Ecija Corp. was down P0.10 to P1.35. PLDT Inc. was down P90 to P1,660. Ayala Corp. was down P28.50 to P703. – Ruelle Albert D. Castro with Reuters
