Local shares drop on profit taking, rate hike fears


PHILIPPINE SHARES dropped on Thursday along with other Asian markets due to profit taking amid fears of an aggressive rate hike from the US Federal Reserve and other central banks.

The benchmark Philippine Stock Exchange index (PSEi) went down by 80.93 points or 1.13% to close at 7,061.49 on Thursday, while the broader all shares fell by 24.59 points or 0.65% to 3,752.54. 

“[Most] US stock markets corrected slightly lower overnight after softer US existing home sales data… and the recent hawkish signals from some Fed and ECB (European Central Bank) officials that suggest more aggressive rate hikes/monetary tightening that could lead to higher interest rates/borrowing costs and could slow down the economic recovery in an effort to curb/rein in on elevated inflation,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

New York Fed President John Williams said on Thursday that the Fed should reasonably consider raising interest rates by a half percentage point at its next meeting in May, which was seen as a further sign that even more cautious policy makers are on board with bigger rate hikes, Reuters reported. This was after the ECB said it plans to cut bond purchases — known as quantitative easing — this quarter, then end them at some point in the third quarter.

“Philippine shares succumbed to profit taking following other Asian markets, while the US traded rather mixed as investors digested a fresh batch of 1Q22 earnings results,” Regina Capital Development Corp. Head of Research Luis A. Limlingan said.

Fears of a sharp economic slowdown in China and higher oil prices weighed on most Asian stocks on Thursday, but a dip in US treasury yields offered some relief for broader markets worried by the prospect of aggressive rate hikes.

Chinese and Hong Kong shares hit month lows and the yuan fell to its lowest in six months as Shanghai authorities said tough coronavirus disease 2019 (COVID-19) restrictions would remain in place.

The declines pulled MSCI’s broadest index of Asia-Pacific shares outside Japan 0.66% lower.

Back home, only two sectoral indices closed in the green on Thursday. Mining and oil went up by 251.37 points or 2.01% to 12,741.04 and financials climbed by 16.62 points or 0.99% to 1,696.10.

Meanwhile, property dropped by 72.02 points or 2.16% to 3,261.29; services went down by 29.76 points or 1.49% to 1,960.75; industrials fell by 110.07 points or 1.13% to 9,608.09; and holding firms lost 70.51 points or 1.06% to end at 6,581.27.

The MidCap index retreated by 7.83 points or 0.66% to 1,185.85, while the Dividend Yield index improved by 6.88 points or 0.419% to close at 1,688.03.

Value turnover increased to P6.04 billion with 895.46 million shares changing hands from the P4.82 billion or 799.64 million issues seen the previous day.

Decliners outnumbered advancers, 91 versus 83, while 61 names closed unchanged.

Foreigners turned sellers anew with net sales of P206.05 million versus the P585.78 million in net purchases seen the previous trading day. — R.C.S. Agustin with Reuters

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