Index tumbles as US rate hike looms

MANILA, Philippines – Share prices declined yesterday as the market digested US Federal Reserve chairman Janet Yellen’s speech last Friday, saying that the case for a rate hike has strengthened.

The benchmark Philippine Stock Exchange index (PSEi) shed 50.56 points or 0.64 percent to finish at 7,794.93 while the broader All Shares index declined 25.39 points or 0.55 percent to end at 4,636.22.

“Yellen’s assessment of the US economy put markets in a rather tricky situation – on one hand, stronger demand from the US, including a stronger dollar, may provide a much needed boost to our long ‘suffering’ export sector. More so, if the traction gain by the world’s largest economy will, at worst, provide a counterbalance to the questions still being intermittently raised on its peers on top of the global rankings – China, Japan and to a certain extent, even the eurozone,” said Justino Calaycay of A&A Securities.

“The consequent justification of an interest rate tweak may effect a rebalancing of managed fund portfolios which may then stir a semblance of short-run negativity in the markets for financial assets,” Calaycay said.

Most of the counters closed in negative territory except for the industrial and mining and oil sectors.

Total value turnover reached P10.91 billion as foreign selling prevailed during yesterday’s trading.

Decliners outpaced advancers by a significant lead, 124 to 73 while 46 stocks were left unchanged.