PSEi dips anew ahead of US inflation data

MANILA, Philippines — The Philippine stock market tumbled anew yesterday as investors continue to wait for the latest US inflation report and as local monetary authorities signaled more interest rate hikes.

The benchmark Philippine Stock Exchange Composite index (PSEi) declined by 47.35 points or 0.70 percent to settle at 6,709.34. Similarly, the broader All Shares index lost 19.77 points or 0.56 percent to finish at 3,539.46.

The sectoral indexes were mixed with financials, property, services and holding firms closing in the red.

Total value turnover reached P7.9 billion. Market breadth was negative with 101 losers and 89 gainers while 48 issues were unchanged.

Rizal Commercial Banking Corp.’s Michael Ricafort said the market corrected lower for the second straight trading day, after recent signals from the Bangko Sentral ng Pilipinas on a possible 25- or 50-basis-point interest rate hike and hawkish signals from the US Federal Reserve as well.

The negative bias spilled over to yesterday’s active stocks as some investors took profits from the market.

Across the region, most markets pushed higher yesterday as investors were buoyed by China’s reopening and optimism that key data due this week would signal a further slowdown in US inflation.

Traders tracked a Wall Street advance as they brushed off fresh warnings that Federal Reserve rates would continue to rise and a World Bank decision to slash its global growth forecast.

After a stumble Tuesday, regional markets resumed the upward push that has characterised the start of the year thanks to China’s emergence from nearly three years of zero-COVID isolation.

The reopening, easing of Beijing’s tech crackdown, and moves to help the property sector have raised hopes for the world’s number-two economy, a crucial driver of world growth.

Hong Kong rose again, having already added about eight percent so far in 2023. Tokyo, Sydney, Seoul, Mumbai and Singapore were also in the ascendancy, though there were losses in Shanghai, Wellington, Taipei and Manila.

Focus this week is on Thursday’s US consumer price index, which is expected to show that price gains eased further in December.

But while that could possibly allow the Federal Reserve to take a lighter approach to its monetary tightening campaign, policymakers continue to push back against any pivot away from rate hikes.– With AFP

Markets were battered last year by fears that almost a year of hikes will tip the economy into recession.

Bank boss Jerome Powell said that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy”.

Meanwhile, Fed governor Michelle Bowman said that while inflation was coming down, “we have a lot more work to do” and that once rates had peaked they would have to stay there for some time.

She added that “unemployment has remained low as we have tightened monetary policy and made progress in lowering inflation”.

“I take this as a hopeful sign that we can succeed in lowering inflation without a significant economic downturn,” she said.

And JP Morgan Chase CEO Jamie Dimon said borrowing costs could actually go higher than the five percent priced in by markets, suggesting they could hit six percent.