Share prices falter on Fed tapering news

The local stock index on Thursday went on a rollercoaster ride, initially retesting the 6,000 level over the US Federal Reserve’s modest tapering of its monetary stimulus before it lost steam at the end of the day.

The main-share Philippine Stock Exchange shed 38.43 points, or 0.64 percent, to close at 5,923.12. The main index touched a high of 6,059.78 in early trade, tracking the upbeat trading on Wall Street. The Dow Jones Industrial Index surged by 292.71 points to 16,167.9 after the US Federal Open Market Committee announced a reduction in its monthly bond-buying operations to $75 billion from $85 billion, saying that monetary policy would remain easy moving forward.

Tracking the decline in many regional currencies, the peso depreciated to 44.435 from Wednesday’s 44.260 against the US dollar.

Joseph Roxas, president of Eagle Equities Inc., said the local stock market reversed earlier gains as investors took profits.

But even as the decline in large-cap stocks weighed down the main index, there were still more advancers (86) than decliners (66) in the overall market. The day’s biggest PSEi laggard was RLC (-4.32 percent), while GTCAP, BPI, AEV, BDO and AP declined by over 2 percent. ICTSI, Jollibee, Globe and AC also slipped by over 1 percent.

On the other hand, LTG (+4.25 percent) led the stocks that bucked the decline, while Bloomberry and MWC also rose by over 3 percent.

The financial, holding firms, services and property subindices ended lower, while the industrial and mining/oil counters inched higher.

“Looking at the performance of DJIA, it seems the market has priced in the tapering. With the Fed move quite small, any future taper would be data-dependent,” said Jonathan Ravelas of Banco de Oro Unibank. He expected risk assets to bounce back while the greenback grows stronger.

With this development, Ravelas said, the PSEi may try the 6,000-6,100 levels, while the peso may hit 44.75 against the US dollar.  Doris C. Dumlao