February 4, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Stocks fall as Fed chair hints at more rate hikes


SHARES closed lower on Thursday after the Federal Reserve Chair said more rate hikes were needed to stem elevated inflation.

The leading index of the Philippine Stock Exchange (PSEi) slipped 48.27 points, or 0.73%, to close at 6,566.80 on Thursday, while the broader all-shares index fell 18.68 points, or 0.54%, to 3,430.89 .

“Share prices declined as the Federal Reserve Chairman maintained his dovish stance on monetary policy,” Jovis L. Vistan, vice president of AB Capital Securities, Inc., said in a Viber message.

“The local stock market fell…on expectations that the Fed may keep interest rates high while awaiting the decision of the Bangko Sentral ng Pilipinas (BSP),” said Claire T. Alviar, research analyst at Philstocks Financial, Inc ., in a Viber message .

Ms Alviar said the Fed chair’s hawkish tone created negative sentiment.

“Chart wise, the market was still struggling to stay above the 6,600 level,” she added.

The US Federal Reserve will raise interest rates again next year to bring inflation under control, Fed Chair Jerome H. Powell said on Wednesday.

The statement came after the Fed raised its benchmark federal funds rate by 50 basis points (bps) to the 4.25%-4.5% range and forecast it could rise to 5%-5.25% next year .

The Fed has now raised borrowing costs by 425 basis points since March.

Meanwhile, the BSP also hiked interest rates by 50 basis points on Thursday, bringing its policy rate to 5.5%. Rates on overnight deposits and credit facilities were also raised to 5% and 6% respectively.

The BSP has hiked rates by 350 basis points since May.

All sector indices closed lower on Thursday. Services declined 23.86 points, or 1.39%, to 1,687.17; real estate fell 35.68 points or 1.23% to close at 2,844.97; Financials declined 16.41 points or 0.98% to 1,655.30; Mining & Oil declined 70.91 points, or 0.67%, to 10,398.57; Industrials fell 38.29 or 0.41% to 9,260.96; and holding companies declined 1.14 points, or 0.01%, to close at 6,401.77.

“All sectors were down led by the service sector down 1.39%. Among index members, Wilcon Depot, Inc. posted the largest gain, up 2.5%, while PLDT, Inc. lagged, down 4.29%,” said Ms. Alviar.

Value turnover fell to 7.27 billion pesos on Thursday, with 2.06 billion shares changing hands out of 115.96 billion pesos with 5.5 billion issues traded on Wednesday.

Rejecters outnumbered promoters by 101 to 71, while 45 names closed unchanged.

Foreigners became net buyers on Thursday with P7.6 million from P688.71 million net sales the previous day.

AB Capital’s Mr Vistan put PSEi’s support at 6440 and resistance at 6660, while Philstocks Financial’s Ms Alviar put support at 6400 and immediate resistance at 6600. — Justine Irish D. Tabile