Stocks, peso fall

Richmond Mercurio, Keisha Ta-Asan - The Philippine Star
Stocks, peso fall
A customer swaps US dollars for pesos at a foreign exchange outlet in Manila.
STAR / File

Local currency closes at lowest level in 18 months

MANILA, Philippines —  The stock market plunged deeper in the red, falling back to the 6,400 level due to economic concerns, while the peso weakened to near all-time low against the dollar.

The benchmark Philippine Stock Exchange index yesterday dropped by 89.93 points or 1.38 percent to 6,411.41, extending its losing streak to four days.

It was the lowest level for the stock market barometer in over a month since closing at 6,404.97 on April 16.

The broader All Shares index likewise lost 0.94 percent or 33 points to end Wednesday’s session at 3,451.74.

Luis Limlingan of Regina Capital said Philippine shares succumbed to more profit taking, sinking the index to 6,400 as concerns over inflation, weak demand at treasury auction and cautious statements from policymakers dampened sentiment.

“Geopolitial tensions, like US-China issues impacting Boeing and fluctuations in vaccine stocks due to bird flu concerns added to volatility,” he said.

Philstocks Financial’s Claire Alviar said investor sentiment was dampened by the latest Monetary Policy Report, which stated that the Bangko Sentral ng Pilipinas sees the Philippines’ economic growth missing the government’s target in 2024 and 2025 due to the impact of high interest rates.

“Overseas, most Asian markets also traded lower as investors assessed inflation rates in the region,” she said.

Net market value turnover was almost flat at P4.98 billion.

Local sectors were covered in red, led by financials, which plummeted by 2.36 percent. Property and services counters also fell by more than one percent each.

Market breadth remained negative as decliners crushed advancers, 127 to 70, while 40 shares were unchanged.

BDO and Metrobank took the biggest hit among index members, declining by 3.7 percent and 3.32 percent, respectively. Manila Electric Co. posted the largest jump at 0.87 percent.

Meanwhile, the peso is edging close to its all-time low of 59 against the dollar after shedding 45 centavos to close at 58.42 from Tuesday’s 57.97, data from the Bankers Association of the Philippines showed.

After returning to the 57-level a day prior, the peso depreciated on yesterday to hit its lowest level in over 18 months or since closing at 58.58 to $1 on Nov. 7, 2022.

The local currency opened at 58.07 yesterday, which was also its strongest showing. The peso lost its steam and hit an intraday low at 58.51 versus the greenback.

Trading was heavy as volume rose by 16.7 percent to $1.4 billion from $1.2 billion last Tuesday.

The peso has depreciated by P3.05 or 5.2 percent from its 55.37 to $1 close on Dec. 29, 2023.

“The Philippine peso experienced the most significant drop among emerging Asian currencies,” Security Bank chief economist Robert Dan Roces said.

“This was influenced by an increase in demand after a rise in US yields overnight and the US Consumer Confidence data exceeding expectations,” Roces added.

US consumer confidence improved in May after deteriorating for three straight months. However, consumers were still worried about inflation and households expected higher interest rates in the coming year.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the peso depreciated due to hawkish signals from the US Federal Reserve.

This was after Federal Reserve Bank of Minneapolis president Neel Kashkari said policymakers should take their time in monitoring whether inflation has slowed enough to warrant Fed rate cuts.

“As a result, US Treasury yields went up, with the 10-year benchmark at 4.57 percent levels, new highs in nearly a month or since May 3,” Ricafort said. (AFP)

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