PHL stocks drop as market digests Fed minutes

PHILIPPINE SHARES declined on Thursday as investors priced in the minutes of the US Federal Reserve’s meeting earlier this month, which were released overnight.

The benchmark Philippine Stock Exchange index (PSEi) went down by 13.33 points or 0.19% to close at 6,685.90 on Thursday, while the broader all shares index dropped by 7.16 points or 0.2% to end at 3,572.20.

“The local bourse declined further this Thursday as investors digested the minutes of the Fed meeting,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“Philippine shares have fallen deeper as market participants mull the summary of the Fed’s latest meeting, contemplating the central bank’s next action to curb inflation,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort in a Viber message likewise said the PSEi closed lower for a second straight day “as Federal Reserve officials continued to anticipate further increases in borrowing costs would be necessary to bring inflation down to their 2% target when they met earlier in February 2023.”

Minutes from the Federal Reserve’s Jan. 31-Feb. 1 meeting said that “almost all” Fed officials agreed to slow the pace of increases in interest rates to a quarter of a percentage point, Reuters reported.

There was also solid backing though for the belief that the risks of high inflation remained a “key factor” that would shape monetary policy and further rate hikes would be necessary until it was controlled.

At that meeting, the US central bank raised the fed funds rate by 25 basis points (bps) to a range between 4.5% and 4.75%, bringing cumulative hikes since March 2022 to 425 bps. Its next policy review is on March 21-22.

Back home, the majority of sectoral indices closed lower on Thursday. Property went down by 21.86 points or 0.75% to 2,885.76; financials declined by 10.68 points or 0.59% to 1,797.26; mining and oil lost 52.41 points or 0.47% to end at 11,041.42; and holding firms fell by 12.93 points or 0.20% to 6,452.

Meanwhile, services gained 7.03 points or 0.42% to 1,672.50; and industrials went up by 21 points or 0.21% to 9,634.78.

Value turnover declined to P4.35 billion on Thursday with 932.40 million shares changing hands from the P4.93 billion with 1.34 billion issues traded on Wednesday.

Decliners narrowly outnumbered advancers, 90 versus 85, while 39 names closed unchanged.

Net foreign selling went down to P712.96 million on Thursday from P752.34 million on Wednesday.

Regina Capital’s Mr. Limlingan put the PSEi’s support at 6,400 to 6,500 and resistance at 6,794.13 to 6,800, while RCBC’s Mr. Ricafort placed immediate major support at 6,250 and resistance at 7,000 to 7,100. — Ashley Erika O. Jose with Reuters