Stocks plunge on threat of Fed rate hike, weak peso

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PHILIPPINE SHARES tumbled on Wednesday in anticipation of another big overnight interest rate hike from the US Federal Reserve and as the peso tested fresh lows against the dollar.

The Philippine Stock Exchange (PSEi) benchmark index fell 106.77 points, or 1.65%, to close at 6,341.69 on Wednesday, while the broader all-shares index fell 47.22 points, or 1.37%, to 3,385 .52 fell.

“Philippine stocks tumbled Wednesday after Wall Street took a 75 basis point (basis point) negative lead ahead of an expected Federal Reserve rate hike,” Papa Securities Corp. equity strategist Manny P. Cruz said in a Viber News.

“Philippine stocks were sold on fiOn the first day of the Fed meeting, investors braced for a later announcement of another rate hike,” added Luis A. Limlingan, head of sales at Regina Capital Development Corp., in a Viber message.

The Fed is expected to announce another giant-scale rate hike at the end of its September 20-21 monetary policy meeting, signaling more rate hikes as it struggles onbottlenation.

“Meanwhile, the Philippine peso has fallen to another new low against the US dollar,” Papa Securities’ Mr. Cruz said.

“Most investors stood on the sidelines waiting for the Fed’s decision. As many anticipated a hawkish stance, the peso continued to depreciate, reaching the P58 level,” Claire T. Alviar, financial research associate at Philstocks, said in a Viber message.

The US Federal Reserve’s hawkish stance has seen the dollar strengthen against most currencies, including the peso.

On Wednesday, the peso closed at a new all-time low of P58 against the dollar, also its worst result for the day ahead of the Fed’s latest policy decision.

Year to date, the peso has weakened 13.72%, or 7p, from its close of 51p per dollar on December 31, 2021.

Philstocks’ Ms Alviar added that the peso could weaken further if the Fed took a more aggressive stance than the Bangko Sentral ng Pilipinas (BSP), which would be detrimental to the economy. The BSP is due to hold its own policy meeting on Thursday, where it is expected to hike rates by 50 basis points.

Most industry indices ended lower on Wednesday, except for mining and oil, which rose 20.30 points, or 0.18% fiClose at 11,276.63.

Meanwhile, financials declined 39.63 points, or 2.48%, to 1,552.94; Real estate fell 63.97 points, or 2.22%, to 2,812.93; Services fell 32.65 points, or 1.95%, to end at 1,640.59; Industrials fell 181.89 points, or 1.93%, to 9,234.72; and hold firms fell 34.56 points, or 0.56%, to close at 6135.02.

Losers overwhelmed movers, 151 to 39, while 33 names closed unchanged.

Value turnover rose to P5.42 billion with 569.25 million shares changing hands from P4.75 billion with 401.19 million issuance recorded the previous trading day.

Overseas net sales rose from P191.98 million on Wednesday to P421.14 million on Tuesday. — Luisa Maria Jacinta C. Jocson

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