PHL shares fall ahead of Powell, BSP testimony

SHARES closed lower on Wednesday on fears of further tightening by the Federal Reserve, whose chief is set to address the US Congress overnight, and ahead of Thursday’s Bangkok Sentral ng Pilipinas (BSP) policy meeting, where a hike is expected prices new.

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

“Philippine stocks fell into oversold territory as the market awaits Fed Chair Jerome Powell [appearance] before Congress later, as a prelude to two days of testimony,” Luis A. Limlingan, director of sales for Regina Capital Development Corp., said in a Viber message Wednesday.

Mr Limlingan added that the market was also cautious ahead of Thursday’s BSP policy meeting, 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 about the recovery of the U.S. and the broader global economy weighed on investor sentiment amid the Fed’s aggressive tightening path.

Mr. Powell was set to begin his two-day testimony before the US Congress overnight, with investors looking for more clues as to whether another 75 basis-point rate hike is on the table at the Fed’s July meeting.

Economists polled by Reuters expect the Fed to deliver a 75 basis-point rate hike next month, followed by a half-point hike in September, and not back to quarter-point steps until November at the earliest.

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

Meanwhile, outgoing GNP Gov. Benjamin E. Diokno and his successor on the Monetary Board, Felipe M. Medalla, on Monday reiterated their intention to gradually raise rates, both signaling a 25 basis point hike this week despite the market expecting a hike by 50 basis points expected.

BSP started its tightening cycle on May 19 with a 25 basis point hike to stem rising prices as headline inflation already hit 5.4% in May, ahead of its 4.6% forecast and 2-4 yearly target % lay. Year-to-date inflation has averaged 4.1%.

All industry indices closed in the red on Wednesday. Property fell 103.84 points, or 3.57%, to 2,800.92; Services declined 33.21 points, or 1.98%, to 1,643.89; Financials fell 23.66 points, or 1.53%, to close at 1522.17; Holding companies fell 72.26 points, or 1.25%, to 5,705.16; Mining & Oil fell 94.22 points, or 0.82%, to 11,399.17; and Industrials declined 3.34 points, or 0.03%, to 8,835.77.

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

Value turnover rose to 4.27 billion pesos, with 905.48 million shares changing hands, from 3.97 billion pesos with 885.42 million issues on Tuesday.

Net sales abroad increased to P560.32 million from P401.59 million previously. — Luisa Maria Jacinta C. Jocson With Reuters

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