Stocks, peso slip ahead of January inflation report

Stocks, peso slip ahead of January inflation report

MANILA – The local bourse’s main index closed lower Monday ahead of the release of the January 2023 inflation report while the peso slipped to 54-level, which has been traced to correction against the United States dollar.

After rising several days last week, the Philippine Stock Exchange index (PSEi) lost 1.29 percent, or 90.77 points, to 6,936.61 points.

It was tracked by counters across-the-board, with All Shares down by 0.83 percent, or 30.78 points, to 3,674.68 points.

Services posted the biggest decline among the sectoral gauges after it slipped by 1.33 percent and was trailed by Financials, 1.22 percent; Property, 1.21 percent; Holding Firms, 1.04 percent; Industrial, 0.79 percent; and Mining and Oil, 0.33 percent.

Volume totaled 1.24 billion shares amounting to PHP9.95 billion.

Decliners led advancers at 103 to 79 while 51 shares were unchanged.

“Philippine stocks were sold ahead of the January inflation print tomorrow (January 7), and investors kept cash with many awaiting the latest economic updates globally,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.

The Philippine Statistics Authority (PSA) is scheduled to release the rate of price increases for the first month of the year, which the Bangko Sentral ng Pilipinas (BSP) forecasts to range between 7.5 to 8.3 percent.

The inflation rate last December accelerated further to 8.1 percent, the highest since November 2008.

Asked for his projection on the path of domestic inflation rate, Limlingan told the Philippine News Agency that “it’s possible inflation as a whole has peaked given that the western economies’ CPI (consumer price index) have begun to decelerate.”

“Lower fuel costs would be one of the leading drivers. At the same time, the local currency has steadily appreciated, lowering import costs as well,” he said.

Limlingan, meanwhile, said “some other inputs remain elevated, primarily with food.”

He said latest oil prices in the international market slipped “as US industrial-linked factory orders dipped while the greenback strengthened, making crude more expensive for non-American buyers.”

He said Brent crude futures went by down 1.04 percent to USD81.98 per barrel and the West Texas Intermediate (WTI) by 0.84 percent to USD75.77 per barrel.

Meanwhile, the local currency depreciated to 54.39 to a greenback from its 53.68 close last Friday.

It opened the week’s first trading day at 54.15 from the previous session’s 53.93 start.

It traded between 54.47 and 54.12, resulting in an average of 54.279.

Volume declined to USD1.05 billion from USD1.17 billion at the end of last week’s trading.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the peso’s weakness is “considered a healthy correction” after a three-day rally at the latter part of last week.

He said the US dollar strengthened due in part to the stronger-than-expected January 2023 jobs data, with unemployment rate down to 3.4 percent, the lowest in more than 53 years.

Ricafort also cited the 517,000 increase in non-farm jobs in the first month of the year, the highest in six month.

He said reports about the latest US-China issue also worried investors following news that alleged Chinese spy balloons off the Carolina coast were shot down by the US, and that the US government postponed US Secretary of Estate Antony Blinken’s China visit following the detection of the alleged surveillance balloon.

For Tuesday, the local currency is expected to trade between 54.25 to 54.50 to a US dollar. (PNA)

Leave a Reply