Stocks continue drop amid inflation concerns
SHARES continued to decline on Thursday on concerns over rising inflation, which could cause further tightening by the US Federal Reserve, and as the Philippine Senate deferred the ratification of a key trade agreement.
The benchmark Philippine Stock Exchange index (PSEi) declined by 25.38 points or 0.37% to close at 6,686.83 on Thursday, while the broader all shares index went down by 7.99 points or 0.22% to 3,581.79.
鈥淭he local market dropped further this Thursday… as investors took cues from Wall Street鈥檚 decline overnight, driven by worries over the US economy amid the Federal Reserve鈥檚 monetary tightening. The Fed has already started with its plans to trim its balance sheet,鈥 Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
鈥淧hilippine shares traded in the red as global economic concerns continued to weigh on investor sentiment. The moves came after JPMorgan Chase & Co. chief executive Jamie Dimon cautioned that an economic 鈥渉urricane鈥 caused by the Fed and the dragging Ukraine-Russia war is brewing,鈥 Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
Mr. Dimon described the challenges facing the US economy akin to a 鈥渉urricane鈥 down the road and urged the Fed to take forceful measures to avoid tipping the world鈥檚 biggest economy into a recession, Reuters reported.
Mr. Dimon鈥檚 comments come a day after US President Joseph R. Biden, Jr. met with Fed Chair Jerome Powell to discuss inflation, which is hovering at 40-year high.
The Fed is under pressure to decisively make a dent in an inflation rate that is running at more than three times its 2% goal and has caused a jump in the cost of living for Americans. It faces a difficult task in dampening demand enough to curb inflation while not causing a recession.
Meanwhile, Philstocks Financial鈥檚 Mr. Tantiangco added that the Senate鈥檚 deferred ratification of the Philippines鈥 membership in the Regional Comprehensive Economic Partnership (RCEP) caused negative sentiment.
Senators on Wednesday deferred the ratification of the RCEP, which was touted as the world鈥檚 biggest trade agreement since it represents 30% of global gross domestic product.
The majority of sectoral indices ended in the green, except for financials, which dropped by 31.39 points or 1.92% to 1,602.19, and industrials, which fell by 74.25 points or 0.80% to 9,139.53.
Meanwhile, mining and oil rose by 154.61 points or 1.28% to 12,188.47; services improved by 9.94 points or 0.53% to 1,860.49; holding firms rose by 10.27 points or 0.16% to 6,264.03; and property added 3.45 points or 0.11% to end at 3,059.11.
Decliners outnumbered advancers, 100 versus 73, while 53 names ended unchanged.
Value turnover decreased to P5.06 billion with 852.38 million shares changing hands from P5.98 billion with 659.26 million issues seen on Wednesday.
Net foreign selling went down to P318.61 million from the P552.88 million seen the previous trading day. 鈥 Luisa Maria Jacinta C. Jocson with Reuters
