Share prices retreated Tuesday as investors took the faster-than-expected inflation rate as an excuse to take profit after a three-day rally.
The Philippine Stock Exchange index (PSEi) slipped 79.79 points to 6,545.38, down 1.2 percent from the previous close.
The broader All Shares index dropped 43.34 points or 1.14 percent to 3,750.69.
Shortly after the opening bell, the Philippine Statistics Authority (PSA) reported inflation at 2.9 percent in December, up from 2.5 percent the prior month and above the market consensus of 2.6 percent.
Losers led gainers 124 to 96, with 39 stocks unchanged. Trading turnover reached P4.51 billion.
Stockbroker SB Equities Inc. noted December’s inflation figure marked a third month of acceleration after a 52-month low of 1.9 percent in September.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), views the latest inflation figure as remaining one of the slowest recorded in more than four years, or since October 2020.
Ricafort attributed the uptick “partly to the seasonal increase in demand during the Christmas and New Year holiday season,” adding that it could “seasonally go down upon crossing the new year.”
“Thus, (the) relatively benign inflation/CPI (consumer price index) at the 2 percent levels is still possible up to early 2025, within the BSP’s inflation target of 2 to 4 percent, which could justify future local policy rate cuts that would match future Fed rate cuts in 2025,” he said
The peso closed at 58.185 to the dollar, gaining some strength from the previous 58.27. The currency opened at 58.15, hitting a high of 58.02 and a low of 58.185. Trading turnover reached $1.87 billion.
In Asia, currencies gained as market participants toyed with the possibility that US President-elect Donald Trump could be less aggressive on tariffs.
South Korean financial markets were the worst performers in Asia last year as the government’s efforts to boost the market were overshadowed by domestic political turmoil and signs of a slowdown in exports, yet the Korean won closed up 0.4 percent for the day.
The Indonesian rupiah added 0.3 percent, while the Thai baht rose as much as 0.4 percent.
The US dollar hovered near a one-week low, after Trump denied a media report that his incoming administration would likely pursue a less-aggressive tariff policy than he previously threatened to do.
The markets usually respond in a pattern leading to volatility from hopes and fears over Trump’s policies, DBS analysts said.
“Markets would briefly respond positively to prospects of moderation in Trump’s unpredictable and polarising policies. However, markets would also quickly adjust when Trump reinforced tariffs as central to his ‘America First’ agenda,” they said in a note.
The Chinese yuan lingered near a 16-month low.
Elsewhere, the Mexican peso closed up 1.5 percent on Monday.
The yuan and the peso are seen as most vulnerable to a stronger dollar and heavier tariffs under Trump.
Claire Alviar, analyst at Philstocks Financial Inc., noted that the surprising inflation figures led for property heavyweights like Ayala Land Inc. and SM Prime Holdings Inc. to suffer P212.47 million and P88.15 million-worth of net foreign selling respectively.
Most actively traded Ayala Land Inc. lost P0.90 to P26.10. International Container Terminal Services Inc. was down P10.60 at P400. BDO Unibank Inc. fell P2.40 to P145.50. Dito CME Holdings Inc. slipped P0.21 to P2.02. Bank of the Philippine Islands shed P1 to P123. SM Investments Corp. was down P6 at P893. SM Prime Holdings Inc. lost P0.45 to P24.70. DigiPlus Interactive Corp. gained P0.55 to P28.50. AREIT Inc. added P0.50 to P39.30. Jollibee Foods Corp. rose P3 to P264.
