Shares inch down as market eyes Fed decision

STOCKS inched lower on Thursday as investors digested the latest US consumer inflation data and their potential impact on the US Federal Reserve’s policy decision next week.

The Philippine Stock Exchange index (PSEi) slipped by 0.02% or 1.36 points to end at 6,641.35 on Thursday, while the broader all shares index dropped by 0.06% or 2.48 points to close at 3,756.07.

“Philippine shares mirrored the mixed results of the US markets as investors processed the latest CPI (consumer price index) figures. November’s CPI report matched economists’ expectations, fueling optimism for another rate cut from the Fed during its policy meeting next week,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Wall Street’s benchmark S&P 500 index rose on Wednesday and a rally in tech stocks lifted the Nasdaq above the 20,000-point milestone for the first time, after a US inflation report boosted expectations of a Federal Reserve interest rate cut, Reuters reported.

The Dow Jones Industrial Average fell 99.27 points or 0.22% to 44,148.56; the S&P 500 gained 49.28 points or 0.82% to 6,084.19; and the Nasdaq Composite gained 347.65 points or 1.77% to 20,034.90.

The consumer price index rose 0.3% last month, the largest gain since April after advancing 0.2% for four straight months, the Labor department’s Bureau of Labor Statistics said. In the 12 months through November, the CPI climbed 2.7% after increasing 2.6% in October. The rise in the CPI was in line with economists’ expectations.

Financial markets have almost fully priced in a quarter-percentage-point rate cut at the Fed’s Dec. 17-18 policy meeting, according to CME Group’s FedWatch Tool. Before the release of the inflation data, the odds were roughly 86%.

The Fed kicked off its monetary policy easing cycle in September. Its benchmark overnight interest rate is now in the 4.5%-4.75% range.

“The PSEi was slightly lower after the dollar-peso exchange rate was slightly higher earlier during the day,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. The local unit closed at P58.24 per dollar on Thursday, rising by four centavos from its P58.28 finish on Wednesday, Bankers Association of the Philippines data showed.

Majority of sectoral indices declined on Thursday. Property dropped by 0.98% or 24.18 points to 2,436.95; industrials went down by 0.46% or 42.50 points to 9,124.67; mining and oil retreated by 0.12% or 9.05 points or 7,534.62; and financials declined by 0.03% or 0.75 point to 2,253.29.

Meanwhile, services rose by 0.72% or 15 points to 2,085.54, and holding firms went up by 0.59% or 33.78 points to 5,683.06.

Value turnover went up to P6.18 billion on Thursday with 589.05 million shares exchanged from the P5.23 billion with 905.03 million issues traded on Wednesday.

Decliners outnumbered advancers, 96 versus 82, while 70 names were unchanged.

Net foreign selling went down to P381.81 million on Thursday from P497.83 million on Wednesday. — Ashley Erika O. Jose with Reuters