Stocks inch up ahead of expected BSP rate hike

MANILA, Philippines — Stocks inched marginally higher yesterday as investors padded their portfolios ahead of an expected rate hike by the Bangko Sentral ng Pilipinas (BSP).

“The local market moved sideways, gaining only 5.64 points or 0.08 percent to close at 6,824.63. After market close, the BSP announced raising policy rates by 50 basis points to 3.75 percent,” AB Capital Securities said in a note.

The broader All Shares index, on the other hand, went down by 0.11 point or 0.003 percent to finish at 3,619.77.

Total value turnover reached P13.8 billion. Market breadth was negative, 104 to 96, while 40 issues were unchanged. Foreign funds were net buyers at P696. 1 million.

The peso, meanwhile, slightly weakened to 55.888 to a dollar yesterday, making it among the worst performing currencies in the region, depreciating more than eight percent on greenback strength as the US Fed continues with its aggressive policy tightening stance.

Markets widely expected the hike against the backdrop of a slowing economic recovery and soaring inflation, with a prolonged weakening in the peso over June and July – more than five percent during that period – also raising chances of a bigger hike.

“Even if a 50-bp hike materializes, boost to peso could be somewhat modest, given BSP’s prior communication on being open to further hikes,” analysts at Maybank said in a note.

Around Asia, most stock markets followed Wall Street lower after the Federal Reserve said US inflation is too high, suggesting support for more aggressive interest rate hikes.

Investors worry aggressive rate hikes by the Fed and central banks in Europe and Asia to tame inflation that is running at multi-decade highs might derail global economic growth.

The Fed notes raised “the prospects of further tightening” even if the pace of hikes slows, while other investors see possible “excessive tightening dragging growth,” said Venkateswaran Lavanya of Mizuho Bank in a report.