Shares dive as peso weakens further

MANILA, Philippines — A weakening peso dragged local stocks in a sea of red yesterday as investors took profit.

The Philippine Stock Exchange index (PSEi) closed at 6,020.07, down by 239.47 points or 3.83 percent while the broader All Shares index lost 107.06 points or 3.2 percent.

“Overseas, recession fears were growing, pulling the US markets down overnight,” said Claire Alviar of Philstocks Financials.

Joseph Roxas of Eagle Equities said the market was spooked because the peso closed at P58.99 versus the dollar yesterday.

He noted that lawmaker and economist Joey Salceda also warned that the peso could sink further to P65 to 68 versus the dollar with the local currency skidding to record lows the past four days.

All the other gauges tanked as well, succumbing to investors’ woes, recession fears and general risk aversion.

Holding firms and financials were among the biggest decliners.

Net value turnover was P9 billion and market breadth was negative, 189 to 28 while 37 issues were unchanged.

Global stocks have been sagging under concerns over stubbornly hot inflation and the risk that central banks could trigger recessions as they try to cool high prices for everything from food to clothing.

Investors have been particularly focusing on the Federal Reserve and its aggressive interest rate hikes. But volatility in currency markets has further roiled markets.

Seeking to make borrowing more expensive and crimp spending, the Fed raised its benchmark rate, which affects many consumer and business loans, again last week. It now sits at a range of 3 percent to 3.25 percent. It was near zero at the start of the year.

The Fed also released a forecast suggesting its benchmark rate could be 4.4 percent by the year’s end, a full point higher than envisioned in June.

The US economy is already slowing, raising worries that rate hikes might cause a recession. The Dow became the last of the major US stock indexes to fall into what’s known as a bear market Monday, falling 1.1 percent to 29,260.81.