Stocks weaken below 6,500 level

MANILA, Philippines — Local stocks slid anew yesterday, bucking the uptrend in other global markets, as investors continue to take profits ahead of an expected resolution of the US debt ceiling and the likelihood of a Federal Reserve pause on rate hikes.

The benchmark Philippine Stock Exchange index (PSEi) closed at 6,430.58, down by 46.78 points or 0.72 percent, while the broader All Shares index slipped to 3,443.85, down by 14.45 points or 0.42 percent.

Total value turnover reached P5.4 billion. Market breadth was negative, 105 to 78, while 50 issues were unchanged.

Unicapital Securities said the conclusion of the MSCI rebalancing also weighed on investor sentiments.

“Breaking the 6,500 support level, the index now tests the 6,400 to 6,500 support band. In the near term we expect the index to have a potential to test the low-end of the range with relief catalysts to be on the final resolution of the US debt ceiling,” it said.

Meanwhile, global shares rose yesterday amid receding bets for a US rate hike this month and relief over the passage through the US House of Representatives of a bill to suspend the federal debt ceiling.

A divided House passed a bill to suspend the $31.4 trillion debt ceiling – and avert a catastrophic default – with majority support from both Democrats and Republicans, stoking optimism that it can move through the Senate before the weekend.

The US legislation in essence temporarily removes the federal government’s borrowing limit through Jan. 1, 2025. The timeline allows President Joe Biden and Congress to set aside the politically risky issue until after the November 2024 presidential election.

“It’s very hard to believe this isn’t going to be even more of a formality in the Senate,” said Ray Attrill, head of foreign exchange strategy at National Australia Bank.

Also bolstering the mood were US Federal Reserve officials including governor and vice chair nominee Philip Jefferson pointing to a rate hike “skip” at the Fed’s June 13-14 policy meeting.

“The market at the moment is also really focused on broad macro trends, such as options for tapers by central banks,” said Sandrine Perret, a portfolio manager at Unigestion. “We are not there yet, but closer to it.”