Stocks stay in red as peso weakens

Iris Gonzales - The Philippine Star

MANILA, Philippines — Stocks stayed in the red yesterday as the continued weakness of the peso and a corresponding widening of the trade deficit heightened selling pressure.

The benchmark Philippine Stock Exchange index (PSEi) closed at 6,255.37, down 94.57 points or 1.49 percent, while the broader All Shares index slipped 35.34 points or 1.04 percent.

Traders said there was broad market selling yesterday as the peso continued to weaken and the trade shortfall widened in May at $5.7 billion.

Philstocks Financial said the market is digesting the weakening peso while waiting for the release of the inflation figures in the US, which hover at 40-year highs.

AB Capital Securities said yesterday’s slump was due to the wider trade deficit in May while First Metro Investment Corp. (FMIC) said the market continues to reflect prevailing uncertainties.

The sectoral gauges were down yesterday except for mining and oil, as volume remained thin at P5.5 billion. Net foreign selling reached P706.88 million.

Decliners outpaced advancing stocks, which left 49 issues unchanged.

FMIC, the investment banking arm of the Metrobank Group, nonetheless said it still expects the main index to reach 7,100 by year-end.

In a briefing yesterday, FMIC head of research Cristina Ulang said this would be fueled by attractive valuation and positive investor sentiment.

“The government’s pronouncement of the continuation of policy reforms, economic expansion, infrastructure rollout, and market-friendly reform measures are expected to drive the market upward. The reopening and growth story is intact,” she said.

In other Asian markets, stocks rose as investors waited for US inflation data some worry might lead to more interest rate hikes.

Investors worry US and European central bank action to cool inflation that is running at a four-decade high might derail global economic growth. The Federal Reserve raised its key interest rate by 0.75 percentage point last month, triple its usual margin, and two members of its rate-setting panel say they support a similar hike this month.        

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