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PHL stocks fall as CPI data fan hawkish Fed bets

REUTERS

SHARES slumped on Wednesday, tracking Wall Street’s decline, following faster-than-expected US consumer inflation in August.

The Philippine Stock Exchange index (PSEi) went down by 118.95 points or 1.77% to close at 6,582.86 on Wednesday, while the broader all shares index dropped by 45.62 points or 1.28% to 3,497.21.

“Along with Asian markets, the local bourse plummeted by 118.95 points or 1.77% to 6,582.86 following the negative cues from the US markets overnight as the US’ August inflation data came in worse than the expectations,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

Ms. Alviar said the faster-than-expected inflation report may result in a hawkish move from the Fed at its Sept. 20-21 meeting, which may cause the dollar to strengthen and could prompt other central banks, including the Bangko Sentral ng Pilipinas, to also act aggressively to stem their currencies’ decline.

“Philippine stocks nosedived on Wednesday as investors’ sentiment was dragged by the steep decline in Wall Street,” Papa Securities, Inc. Equities Strategist Manny P. Cruz said in a Viber message.

The US consumer price index (CPI) unexpectedly rose in August amid rising rent and healthcare costs, strengthening the case for another aggressive Fed rate hike.

Consumer inflation edged up by 0.1% to 8.3% last month after being unchanged in July. In the 12 months through August, the CPI increased to 8.3%.

Fed Chair Jerome H. Powell last week said the central bank was “strongly committed” to fighting inflation. The Fed has raised rates by 225 basis points (bps) since March, including two 75-bp hikes in June and July.

All three major US stock indexes ended sharply lower following the inflation report. The Dow Jones Industrial Average fell by 1,276.37 points or 3.94% to 31,104.97; the S&P 500 lost 177.72 points or 4.32%, to 3,932.69; and the Nasdaq Composite dropped by 632.84 points or 5.16% to close at 11,633.57.

Back home, all sectoral indices closed in the red on Wednesday. Holding firms lost 150.49 points or 2.31% to end at 6,347.80; financials declined by 36.90 points or 2.24% to 1,603.48; industrials dropped by 137.05 or 1.39% to 9,660.12; mining and oil lost 125.96 points or 1.08% to close at 11,455.45; services went down by 16.57 points or 0.97% to 1,687.47; and property decreased by 22.96 points or 0.77% to close at 2,938.80.

Decliners outnumbered advancers, 137 against 41, while 46 names closed unchanged.

Value turnover went down to P5.29 billion on Wednesday with 821.23 million shares changing hands from the P5.52 billion with 706.04 million issues seen the previous trading day.

Net foreign selling was at P23.71 million on Wednesday versus the P437.66 million in net purchases recorded on Tuesday.

Papa Securities’ Mr. Cruz placed the PSEi’s near-term support at the 6,500 to 6,500 area and noted that it may face difficulty in breaking through the 6,700-6,800 resistance level on expectations of another jumbo Fed hike next week. — Justine Irish D. Tabile

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