Stocks down, peso weaker on hawkish Fed signals

Stocks down, peso weaker on hawkish Fed signals

MANILA – The decline in United States’ equity markets last week, along with hawkish signals from Federal Reserve officials, resulted in the negative close of the local bourse’s main index on Monday and the weakening of the peso.

The Philippine Stock Exchange index (PSEi) shed 1.29 percent, or 86.56 points, to 6,599.34 points.

All Shares followed with a drop of 1.12 percent or 39.95 points, to 3,532.25 points.

Most of the sectoral gauges also finished the day lower, led by Services after it slipped by 3.46 percent.

It was trailed by Mining and Oil, 3.20 percent; Property, 1.55 percent; Industrial, 1.39 percent; and Holding Firms, 0.94 percent.

Only the Financials index gained during the day at after it went up by 0.27 percent.

Volume reached 893.23 million shares amounting to PHP7.5 billion.

Decliners led advancers at 149 to 55 while 34 shares were unchanged.

Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales, traced the negative close of the PSEi partly to the looming Morgan Stanley Capital International (MSCI) rebalancing and the wait-and-see stance on the release of US’ durable goods orders for February 2023, manufacturing index and the speaking engagements of several Federal Reserve officials.

He said oil prices ended last Friday’s trading up “as prices are supported by the prospect of lower Russian exports but pressured by rising inventories in the US and concerns over global economic activity.”

Brent crude oil futures rose by 1.2 percent to USD83.16 per barrel and the West Texas Intermediate (WTI) by 1.2 percent to USD76.32 points.

Meanwhile, the local currency depreciated and ended the day at 55.51 from last Friday’s 54.87 to a US dollar.

It opened the day at 55.25, weaker than 55.12 start in the previous session.

It traded between 55.64 and 55.00, resulting in an average of 55.312.

Volume reached USD1.33 billion, higher than the USD1.11 billion at the end of last week.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort traced the peso’s weakness to, among others, the performance of the PSEi, correction of the US dollar and the geo-political concerns between the US and China, as well as the reports about Russia suspending its observation of the New Strategic Arms Reduction Treaty (New START) with the US.

Ricafort said the peso’s first important support level over the past month was at 54.30 to 54.50 levels and these “protect the structural integrity of the underlying upward trend since February 3, 2023”.

He forecasts the peso to trade between 55.40 to 55.60 against the greenback on Tuesday. (PNA)

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