Stocks fall ahead of US inflation report in March

SHARES fell on Monday amid a shortened trading week and ahead of the release of US inflation data expected to hit a new high in March.

The Philippine Stock Exchange (PSEi) benchmark index fell 29.73 points, or 0.42%, to close at 6,988.29 on Monday, while all stocks lost a total of 11.24 points, or 0.30%, to close at 3,728.21 .

“Share prices opened the week on a negative note. Market participants traded cautiously ahead of a long fast break as fears over U.S. inflation continue to spook investors,” Papa Securities Corp. equity strategist Manny P. Cruz said in a text message.

“Monday’s sideways trading ended in a last minute sell-off that crashed the local market. The decline and lethargic trade are attributed to inflation concerns in the Philippines, the Federal Reserve’s dovish policy outlook and the Russia-Ukraine war and its global economic impact,” said Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial, Inc in a Viber message.

“Philippine equities sold off quietly as the market lacked key catalysts during the shortened trading week. Sentiment also didn’t get much of a boost as US stocks posted losses for the week, but ended Friday mixed as investors braced for tighter monetary policy from the Fed,” added Luis A. Limlingan, director of sales, Regina Capital Development Corp. added viber message.

Markets have priced in the risk of ever larger rate hikes by the Federal Reserve with futures gains of 50 basis points (bps) at both the May and June meetings, Reuters reported.

The Fed raised interest rates by 25 basis points in March for the first time since 2018 to combat inflation, which hit a 40-year high in February.

The US CPI report for March is due out on Tuesday and the median forecast is for a stratospheric rise of 1.2%, taking annual inflation to a staggering 8.5%.

Asian stocks slid Monday ahead of a week of central bank meetings and US inflation data.

At home, all sector indices closed in the red on Monday. Real estate fell 24.17 points, or 0.74%, to 3,243.84; Mining and Oil slipped 80.32 points, or 0.64%, to 12,349.86; Industrials fell 45.34 points, or 0.46%, to 9,621.75; Holding companies fell 25.42 points, or 0.38%, to 6,543.22; Financials fell 1.87 points, or 0.11%, to 1,667.81; and services declined 1.46 points, or 0.07%, to 1,930.86.

Meanwhile, the mid-cap index rose 0.04 points, or 0.52%, to 1,191.22 and the dividend yield index fell 4.60 points, or 0.27%, to 1,692.61.

Value turnover declined to P3.36 billion, with 882.34 million shares changing hands, from P4.02 billion with 659.97 million issues on Friday.

There were more rejecters than promoters, 102 versus 75, while 55 names remained unchanged.

On Monday, net overseas sales were recorded at P208.85 million versus P458.19 million in net purchases the previous trading day. — LMJC Jocson With Reuters