Stocks nosedive as inflation surges

MANILA, Philippines — Local stocks nosedived yesterday as consumer inflation picked up to its highest rate in four months, drawing a warning from the central bank that it might resume monetary tightening.

The 30-company Philippine Stock Exchange index (PSEi) closed at 6,178.60, shedding 1.90 percent, as inflation in September came in at 6.1 percent, faster than August’s 5.3 percent.

The broader All Shares index ended at 3,348.75, down by 1.47 percent.

Total value turnover reached P5.433 billion. Market breadth was negative, 119 to 67, while 45 issues were unchanged.

Juan Paolo Colet, managing director at China Bank Capital, said the unexpectedly high September inflation print doused cold water on investor sentiment and sank the index to its lowest in over a week.

“Local headline inflation came in at 6.1 percent, much higher than the median analysts’ estimate of 5.4 percent and at the high end of the Bangko Sentral ng Pilipinas’ guidance of 5.3 to 6.1 percent. This negative surprise brought selling pressure throughout the trading session and was in stark contrast to the positive performance of most Asian stock markets,” he said.

Mikhail Plopenio of Philstocks Financial said investors were worried given that this marked the second consecutive month of rising inflation.

“September’s inflation print brings the year-to-date inflation to 6.6 percent, going further away from the government’s two to four percent target range,” he said.

Additionally, he said this heightens worries that the BSP will hike rates.

Elsewhere in Asia, markets posted modest gains, rebounding from previous losses after a strong lead from Wall Street.

US markets finished Wednesday higher, snapping a three-day losing streak, with the tech-rich Nasdaq closing up 1.4 percent.

“The US market saw gains driven by weak economic data, alleviating worries about prolonged elevated interest rates,” noted Stephen Innes, managing partner at SPI Asset Management.