Philippine stocks slip on inflation and rate hike fears

MANILA, Philippines — The Philippine stock market tumbled yesterday as interest rate and inflation concerns continue to weigh on investor sentiment.

The benchmark Philippine Stock Exchange Composite index (PSEi) fell 86.56 points or 1.29 percent to close at 6,599.34.

The market’s decline was expected as most analysts expect market volatility to persist in the first quarter of the year. The broader All Shares index slipped to 3,523.25, down 39.95 points or 1.12 percent.

Total value turnover reached P7.5 billion.  Market breadth was negative, 149 to 55 while 34 issues were unchanged.

Unicapital Securities said the market has a downward bias as investors’ sentiment remains clouded by inflation and policy rate hikes concerns, both locally and in the US.

The market may rebound in the coming days driven by positive corporate earnings but still with higher volatility, Unicapital Securities said.

The sectoral gauges were mixed with services, mining & oil and property among the biggest decliners.

Only the financials index was up.

Shares in Asia were likewise down after Wall Street benchmarks closed out their worst week since early December. US futures edged higher while oil prices fell.

Reports on inflation, the jobs market and retail spending have come in hotter than expected, leading analysts to raise forecasts for how high the Federal Reserve will have to take interest rates to slow the US economy and cool inflation.

Higher rates pressure business activity and investment prices. So far, they do not seem to be slowing growth as much as anticipated.

“It is becoming increasingly apparent that inflation, and associated inflation expectations and wage pressures, will not decline in a predictable linear manner,” Mizuho Bank said in a commentary.

“Early trading on Monday suggests that risk aversion has been brought forward to Asian markets.” Mizuho Bank said.

The measure of inflation preferred by the Fed, reported Friday, said prices were 4.7 percent higher in January than a year earlier, after ignoring costs for food and energy because they can swing more quickly than others. That was an acceleration from December’s inflation rate and was higher than economists’ expectations for 4.3 percent.