Philippine shares close lower on rate-hike worries

MANILA, Philippines — The Philippine stock market fell yesterday as investors stayed on the sidelines ahead of the Federal Reserve meeting

The benchmark Philippine Stock Exchange Composite index (PSEi) closed at 6,744.12, down by 34.90 points or 0.51 percent.

Likewise, the broader All Shares index slipped to 3,607.75, down by 13.94 points or 0.38 percent.

Regina Capital said Philippine shares slipped ahead of the upcoming meeting of the US Federal Reserve on February 23 and as US inflation weighed on investor sentiment.

All the other sectors finished in the red with industrial, property and holding firms closing in negative territory.

Total value turnover was thin at P3.301 billion and market breadth was negative, 115 to 72 while 47 issues were unchanged.

Meanwhile, Asian shares got off to a subdued start yesterday as a US holiday made for slow trading ahead of minutes of the last Federal Reserve meeting and a reading on core inflation that could add to the risk of interest rates heading higher for longer.

Minutes of the Fed’s last meeting due on Wednesday should add color on the deliberations, though they have been superseded somewhat by barnstorming numbers on January payrolls and retail sales.

The latter means figures on US personal consumption expenditures (PCE) due this Friday are expected to show a 1.3 percent jump in January, more than recovering from weakness in the prior two months.

The prospect of more Fed hikes has lifted Treasury yields and generally supported the dollar, which hit a six-week top on a basket of currencies last week.

The euro was stuck at $1.0676, having touched a six-week low of $1.0613 on Friday, while the dollar was just off a two-month top on the yen at 134.34.

Investors are anxiously awaiting Friday’s testimony from the newly nominated head of the Bank of Japan, and his thinking on the future of yield curve control (YCC) and super-easy policy.

Any hint of an early end to YCC could see yields spike globally and send the yen surging, so analysts assume Kazuo Ueda will be careful not to spook markets.

Higher yields and a firmer dollar have not been good for gold, which was struggling at $1,837 an ounce and not far from a five-week low of $1,807.