Local stocks were mixed yesterday as most investors remain cautious due to inflation worries and risk of possible lower second quarter growth while some booked gains from the previous two-day rally.
The Philippine Stock Exchange index (PSEi) was down by 11.44 points to close at 6,274.80, a 0.18 percent drop while the broader all shares index was up by 0.17 points to 3,381.53, a 0.005 percent hike.
Gainers edged losers 103 to 81 with 40 stocks unchanged. Trading turnover reached P5.03 billion.
“Local inflation worries amid the supply problems in certain key food items, and Fitch Ratings’ downward revision of their Philippine economic growth forecast (also) dampened sentiment,” Japhet Tantiangco, analyst at Philstocks Financial Inc., said.
Tantiangco added some booked gains from as trading remained tepid with the turnover still the year-to-date average of P6.44 billion.
Most actively traded Semirara Mining and Power Corp. was up by P1.45 to P40.70. Ayala Land Inc. was up P0.80 to P25.20. BDO Unibank Inc. was up P0.50 to P118. SM Prime Holdings Inc. was down P1.10 to P36.75 while SM Investments Corp. was down P8 to P788.
The peso, meanwhile, closed at 56.29 to the dollar, down from 56.255 on Tuesday. It opened at 56.18, an intraday high, and hita low of 56.35. Trading turnover reached $710.05 million.
Currencies of emerging markets rose on Wednesday, taking cues from strong US corporate earnings, while a retreat in the US dollar and anticipated resumption of Russian gas supply to Europe provided some respite from recession fears.
US stocks bounced back sharply on Tuesday as more companies joined big banks in reporting earnings that beat forecasts. That offered some respite to investors worried about soaring inflation and the US Federal Reserve’s rate hikes denting the corporate bottom line.
Investors had reacted positively to corporate earnings and were encouraged to invest in riskier assets, said Jun Rong Yeap, markets strategist at IG, adding the market had shrugged off the cautious take by companies on the economic outlook.
Some Asian currencies regained footing as the dollar continued its descent after markets priced in a higher likelihood of a larger rate hike by the European Central Bank (ECB) on Thursday.
The South Korean won rose 0.1 percent, while both the Singapore dollar and the Malaysian ringgit were trading slightly firmer. The Philippine peso and the Thai baht bucked the trend to fall 0.2 percent each.
Positive sentiment was also aided by news that Russian gas supply to Europe via the Nord Stream 1 pipeline was seen restarting on time on Thursday after a scheduled maintenance, easing concerns about gas supply to Europe.
However, analysts at Mizuho pointed out that “Europe’s preparation to cut gas consumption speaks of perils facing the Euro, especially as Russian gas flows even on resumption may still face likely caps.”
“So it has been a risk positive night, but recession fears certainly haven’t gone away and the rebound in equities over the past week could as much reflect a recovery from over-sold levels and extreme levels of pessimism,” NAB analysts said in a note.
A Reuters report suggested that the ECB could hike rates by 50 basis points at their meeting. The Bank of Japan and Bank Indonesia (BI), which will also meet on Thursday, are expected to stand pat on interest rates. However, calls for BI to hike rates by 25 basis points grew louder in a bid to shore up the rupiah.
“As regional inflation rises and the window to tighten appears to narrow due to growth risks, Asian central banks are likely to feel compelled to increase the pace of tightening in what seems like a relatively short hiking cycle,” analysts at DBS noted. – Ruelle Castro
