Share prices ended lower Tuesday as risk aversion spiked following the faster than expected January inflation rate, raising the chance that the central bank will deliver a bigger interest rate hike to tame prices when it meets next week.
The Philippine Stock Exchange index was down 55.35 points, a 0.8 percent drop to 6,881.26.
The broader all shares index was down 18.93 points or 0.52 percent to 3,655.75.
Losers edged gainers 97 to 88 with 51 stocks unchanged. Trading turnover reached P6.14 billion.
The peso closed at 55.085 to the dollar, down from 54.39 on Monday.
The currency opened at 54.65 and hit a high of 54.60 and a low of 55.10. Trading turnover reached $1.27 billion.
“We believe Governor (Felipe) Medalla will whip out a 50bp (basis point) rate increase in an attempt to get ahead of surging inflation,” said Nicholas Mapa, senior economist with ING.
“Medalla previously sounded off on the possibility of pausing ‘as early as the first quarter’ but today’s inflation report likely means BSP (Bangko Sentral ng Pilipinas) will need to stay hawkish in the near term.”
A strong US jobs data raised concerns that the Federal Reserve could keep interest rates higher for longer. Investors now await the Fed chief’s speech at the Economic Club of Washington later in the day for clues on future policy decisions.
“All eyes will be on Fed Chair Jerome Powell’s comments ahead, with the recent strength in the labor market seemingly opening the door for more hawkishness,” said Yeap Jun Rong, a market analyst at IG.
The dollar index, which hit a near one-month high of 103.76 on Monday, fell 0.1 percent to 103.45 as of 0540 GMT.
Claire Alviar, analyst at Philstocks Financial Inc., said investors were spooked by the higher than expected January inflation, concerning them of the possibility that the BSP will remain aggressive in its monetary tightening.
Most actively traded SM Investments Corp. was up P5 to P915.
Ayala Land Inc. was down P0.25 to P29.05. International Container Terminal Services Inc. was down P3.40 to P206.60. Universal Robina Corp. was steady at P148. SM Prime Holdings Inc. was down P0.50 to P37.50. BDO Unibank Inc. was down P1 to P124. Bank of the Philippine Islands was down P1.10 to P106.90. Semirara Mining and Power Corp. was steady at P30.25. Ayala Corp. was up P5 to P710. Union Bank of the Philippines was down P2.25 to P90.10.
