Stocks weaken on US rate hike fears

The local stock barometer slipped for a fourth session in a row Tuesday as fresh US interest rate jitters spooked regional markets.

Reversing its morning gain, the Philippine Stock Exchange index (PSEi) lost 29.09 points or 0.38 percent to close at 7,580.22.

The most battered sector was the interest rate-sensitive property counter, which tumbled by 1.24 percent. The industrial, holding firms and services firms likewise weakened. On the other hand, the financial and mining/oil counters were firm, both rising by more than 1 percent.

In a research note, Citigroup said that with more than seven weeks to go to the December US Fed policy meeting, US Federal Fund futures markets now assigned a 75-percent probability of a rate increase by December. In a research note Tuesday, Citi noted that stronger-than-expected October flash PMI (purchasing managers’ index, a key manufacturing indicator) readings from Europe and the US helped renew the selloff in global fixed income markets and offered another boost to the dollar.

“Renewed fear of higher global rates and a stronger dollar may weigh on sentiment toward emerging markets,” it said.

Market breadth positive

Total value turnover for the day was thin at P6.54 billion. Despite the PSEi’s decline, market breadth was positive as there were 97 advancers, which outnumbered 82 decliners, while 49 stocks were unchanged. This suggested selective buying that focused away from pricey large-cap stocks.

Foreign investors remained net sellers to the tune of P324 million.

Investors dumped shares of SM Prime, which fell by 2.79 percent, while PLDT, Aboitiz Equity Ventures, JG Summit, Jollibee and Megaworld tumbled by more than 1 percent. Ayala Land, URC, GT Capital and Security Bank also declined.

On the other hand, Metrobank and BDO both rose by more than 2 percent while Metro Pacific Investments Corp., Ayala Corp., BPI and SM Investments Corp. all firmed up.

Among the notable gainers outside the PSEi was gaming firm Bloomberry, which surged by 4.27 percent. The gaming industry is seen to reap the rewards of President Duterte’s recent state visit to China. Melco Crown also advanced by 4.19 percent.

China and the Philippines rekindled bilateral ties after a five-year diplomatic chill, spiced by an agreement to return to bilateral discussions to address the maritime dispute. Chinese President Xi Jinping agreed to lift travel advisories issued a few years ago to Chinese citizens traveling to the Philippines, a deal seen to encourage more Chinese citizens to travel in the Philippines.