PHL stocks sink ahead of Powell testimony, BSP

PHL stocks sink ahead of Powell testimony, BSP

SHARES ended lower on Wednesday amid fears of further tightening by the Federal Reserve, with its chief set to speak to the US Congress overnight, and ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on Thursday, where it is expected to hike rates anew.

The benchmark Philippine Stock Exchange index (PSEi) plunged by 117.19 points or 1.86% to close at 6,168 on Wednesday, while the broader all shares index gave up 40.32 points or 1.19% to end the session at 3,328.35.

“Philippine shares fell into oversold territory as the market awaits Fed Chair Jerome Powell’s [appearance] before Congress later, kicking off two days of testimony,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message on Wednesday.

Mr. Limlingan added that the market was also cautious ahead of the BSP’s policy meeting on Thursday, where investors expect a 50-basis-point (bp) hike.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message that worries over the recovery of the US and the broader global economy amid the Fed’s aggressive tightening path weighed on investor sentiment.

Mr. Powell was set to start his two-day testimony to the US Congress overnight, with investors looking for further clues on whether another 75-bp rate hike is on the table at the Fed’s July meeting.

Economists polled by Reuters expect the Fed will deliver a 75-bp interest rate hike next month, followed by a half-percentage-point rise in September, and won’t scale back to quarter-percentage-point moves until November at the earliest.

The Fed last month raised borrowing costs by 75 bps, the largest since 1994, after data showed inflation hit another 40-month high in May, showing it had yet to peak.

Meanwhile, outgoing BSP Governor Benjamin E. Diokno and his successor Monetary Board member Felipe M. Medalla on Monday affirmed their intent to raise rates gradually, both signaling a 25-bp hike this week despite market expectations of a 50-bp increase.

The BSP began its tightening cycle with a 25-bp hike on May 19 to help stem rising prices as headline inflation already reached 5.4% in May, higher than its 4.6% forecast and 2-4% target for the year. Year to date, inflation has averaged 4.1%.

All sectoral indices ended in the red on Wednesday. Property sank by 103.84 points or 3.57% to 2,800.92; services declined by 33.21 points or 1.98% to 1,643.89; financials lost 23.66 points or 1.53% to end at 1,522.17; holding firms dropped by 72.26 points or 1.25% to 5,705.16; mining and oil fell by 94.22 points or 0.82% to 11,399.17; and industrials retreated by 3.34 points or 0.03% to 8,835.77.

Decliners overwhelmed advancers, 115 versus 68, while 48 names ended unchanged.

Value turnover increased to P4.27 billion with 905.48 million shares changing hands from the P3.97 billion with 885.42 million issues seen on Tuesday.

Net foreign selling grew to P560.32 million from P401.59 million previously. — Luisa Maria Jacinta C. Jocson with Reuters