PSEi tumbles on hawkish Fed signal
The local stock barometer slid back to the 6,800 mark on Thursday as the US Federal Reserve (Fed) was seen further hawkish after delivering the much-anticipated 25-basis point interest rate hike.
The main-share Philippine Stock Exchange index lost 73.03 points or 1.05 percent to close at 6,855.31, tracking the decline across the US and regional markets.
Net foreign selling for the day amounted to P1.78 billion.
“The Fed hiked 25 basis points as expected, but surprised investors by offering little to restrain expectations for faster hikes in the future,” Citigroup said in a research note.
In scrutinizing the language used by the Fed, Citigroup noted that markets added about a 50 percent probability of another 25-basis point hike in 2017, pushing US Treasury yields higher and reenergizing the dollar but dragging down equity and commodity markets.
BofA Merrill Lynch said that while the latest rate hike had been expected, the focus was on the median ‘dot-plot’ projection for the Fed funds rate which had shifted higher to show three rate hikes in 2017. The investment house also noted that Fed chair Janet Yellen had not committed to any view of how fiscal policy changes could affect the economic outlook.
At the local market, all counters ended in the red. The most battered was the interest rate-sensitive property sub-index, which fell by 2.29 percent. The industrial counter also fell by 1.21 percent.
“In terms of technicals, the index is expected to maintain its downtrend, and can test the primary 6,800 and secondary 6,700 support levels in the coming sessions,” said local stock brokerage AB Capital Securities.
Immediate and secondary resistance levels are at 6,900 and 7,000, respectively, the brokerage said.
Total value turnover for the day amounted to P8.7 billion. Market breadth was negative, with 117 decliners overwhelming 66 advancers while 40 stocks were unchanged.
Investors dumped shares of SM Prime, which fell by 2.95 percent, while BDO Unibank and JG Summit also slipped by over 2 percent.
Universal Robina Corp., Ayala Land Inc., PLDT Inc., Megaworld Corp., Jollibee Foods Corp. and LT Group Inc. all fell by over 1 percent.
Metrobank and Semirara Mining & Power Corp. also slipped.
Shakey’s Pizza Asia Ventures Inc., which debuted on the stock exchange under the ticker “PIZZA,” bucked the overall downturn. It gained 7.46 percent and was the second most actively traded stock on the market.
Ayala Corp. also rose by 1.74 percent while BPI, SM Investments and DMCI Holdings also firmed up.
