Stocks continue to fall ahead of US inflation report

EQUITIES slid Wednesday ahead of the release of the June US Consumer Price Index (CPI) report, which is expected to give the Federal Reserve another reason to continue raising interest rates aggressively.

The Philippine Stock Exchange (PSEi) benchmark index fell 94.57 points, or 1.48%, to close at 6,255.37 on Tuesday, while the broader all-shares index fell 35.34 points, or 1.03%, to 3,374 .57 declined.

“Philippine stocks slid as investors braced for June’s CPI report,” Luis A. Limlingan, director of sales at Regina Capital Development Corp., said in a Viber message.

Mr Limlingan said the report, due overnight, is likely to show US inflation has picked up further over the past month.

“The likely hot reading could prompt the Fed to hike another 75 basis points (basis points) during this month’s meeting,” he said.

“Sentiment was also weighed on as the US slumped on Tuesday, as worries about global economic growth dampened investors’ appetite for risky assets and Wall Street braced for June inflation data. Investors seemed to favor traditional safe havens,” added Mr. Limlingan.

“The local stock market fell… as the market digests the flagging peso while awaiting the U.S. inflation rate,” Claire T. Alviar, research analyst at Philstocks Financial, Inc., said in a Viber message.

“Almost all markets worldwide are awaiting US inflationary pressures as it will heavily influence the Federal Reserve’s decision on interest rates, which will negatively impact almost all currencies once the US dollar strengthens if the Fed monetary tightening is becoming more aggressive,” Ms Alviar added.

The peso rallied Wednesday to close at P56.26 per dollar, up 11 centavos from Tuesday’s close of P56.37, a nearly 18-year low.

Still, the local unit is down 10.31% year to date, or 5.26p from the close of 51p against the dollar on December 31, 2021.

Most industry indices ended lower on Wednesday, except for mining and oil, which rose 26.42 points, or 0.23%, to 11,122.59.

Meanwhile, holding companies fell 116.26 points, or 1.95%, to 5,826.17; Real estate fell 55.24 points, or 1.92%, to 2,820.22; Financials declined 29.44 points, or 1.92%, to 1,496.64; Services fell 9.91 points, or 0.59%, to 1,658.37; and Industrials fell 14.21 points, or 0.15%, to close at 9,357.77.

Value turnover rose to PSE5.55 billion on Wednesday, with 1.28 billion shares changing hands from P4.19 billion with 955.85 million issues the previous trading day, PSE data showed.

There were more relegations than promotions, 139 versus 44, while 49 names closed unchanged.

Overseas net sales rose to P706.88 million on Wednesday from P323.17 million the previous trading day.

Regina Capital’s Mr. Limlingan put PSEi’s support at 6,200 and resistance in the 6,450 area. — JIDP. tabel