Stocks retreat ahead of US Fed policy meet

MANILA, Philippines — It was a bloodbath at the Philippine Stock Exchange yesterday as the market again failed to hold its strength above the 7,000 level.

The benchmark PSE index (PSEi) spiraled down to 6,793.25, losing 177.72 or 2.55 percent, while the broader All Shares index tumbled to 3,590.40, down by 69.56 points or 1.90 percent.

Philippine stocks led decliners in Asia as they dropped in their sharpest fall since Dec. 2 last year, Reuters said.

The sectoral gauges reflected massive selloffs as well, with mining and oil and property among the biggest decliners.

Total value turnover reached P11.3 billion. Market breadth was overwhelmingly negative, 147 to 50, while 27 issues were unchanged.

Veteran stock market strategist Jonathan Ravelas said the PSEi, as widely feared, failed to sustain itself above the 7,000 mark, indicating that prices may have peaked.

Luis Limlingan of Regina Capital said Philippine shares continued to decline ahead of the start of the US Federal Reserve’s latest policy meeting.

Investors expect the US Fed to raise rates by 25 basis points on Wednesday, followed the day after by half-point increases by the Bank of England and the European Central Bank.

Japhet Tantiangco of Philstocks Financial said lingering concerns over inflation, interest rates and external headwinds also continued to weigh on sentiment.

Around Asia, most stock markets slipped with traders waiting to see if the US central bank would slow the pace of its interest rate hikes as inflation and the economy show signs of losing momentum.

The US Fed is widely expected to raise interest rates by 25 basis points on Wednesday - the smallest since the central bank kicked off its tightening cycle 10 months ago with one the same size. Analysts expect two more quarter-percentage point hikes by mid-2023.

“Post-meeting communication is probably going to emphasize that the Fed is not done in terms of further tightening and (Chair Jerome) Powell will probably still signal that more rate hikes are in the pipeline,” said Mitul Kotecha, head of EM strategy at TD Securities.