SHARES dropped on Tuesday as global oil prices surged after the European Union (EU) said it aims to cut oil imports from Russia by 90% by this year’s end.
The benchmark Philippine Stock Exchange index (PSEi) dropped by 47.64 points or 0.69% to close at 6,774.68 on Tuesday, while the broader all shares index went down by 26.16 points or 0.72% to 3,606.91.
“The local market pulled back this Tuesday as investors took profits from its preceding four-day rally. The rise in oil prices caused by the EU decision to cut 90% of its Russian crude imports by the end of the year contributed to the decline,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
“Oil prices rose to two-month highs as traders waited to see if the EU would reach an agreement on banning Russian oil ahead of a meeting on a sixth package of sanctions against Moscow for its invasion of Ukraine,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.
European Union leaders handed Hungary concessions to agree an oil embargo on Russia over its invasion of Ukraine, sealing a deal in the wee hours on Tuesday that aims to cut 90% of Russia’s crude imports into the bloc by the end of the year, Reuters reported.
The embargo — once legally imposed in the coming days — will hit seaborne shipments of Russian oil and encompass most imports from Russia once Poland and Germany stop buying it by the end of 2022, which diplomats and officials from both countries said was now government policy.
Oil prices extended gains on Tuesday after the EU agreed to slash oil imports from Russia, fueling worries of a tighter market already strained for supply amid rising demand ahead of peak US and European summer driving season.
US West Texas Intermediate crude was trading at $119.12 a barrel up $4.05 or 3.5% from Friday’s close. There was no settlement on Monday due to a US public holiday. Both benchmarks have posted daily gains since Wednesday.
First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message that the market corrected slightly following the full implementation of the MSCI rebalancing.
The majority of the sectoral indices ended in the red, except for financials, which gained by 20.29 points or 1.23% to 1,658.62, and mining and oil, which rose by 22.23 points or 0.18% to 11,920.22.
Meanwhile, services declined by 35.66 points or 1.87% to 1,870.55; property gave up by 43.90 points or 1.41% to end at 3,049.62; industrials fell by 100.87 points or 1.06% to 9,351.59; and holding firms contracted by 15.83 points or 0.25% to 6,291.16.
Decliners bested advancers, 113 versus 76, while 48 names ended unchanged.
Value turnover surged to P35.71 billion with 2.17 billion shares changing hands from the P7 billion with 890.17 million issues seen the previous trading day.
Foreigners turned sellers on Tuesday with P232.01 million in net selling versus the P69.01 million in net purchases seen on Monday. — L.M.J.C. Jocson with Reuters