PSEi flat ahead of US Fed stance

The local stock barometer ended flat on Wednesday as investors across the region chose to be cautious ahead of the outcome of the US Federal Reserve’s latest policy setting.

The Philippine Stock Exchange index shed 2.21 points or 0.03 percent to close at 7,227.45. Across the region, investors awaited the outcome of the U.S. Federal Reserve Open Market Committee (FOMC) meeting.

Citigroup said in a research note on Wednesday that markets would await a signal from the FOMC meeting about the likely path of “policy normalization.” While the market does not expect any tightening in interest rates in this meeting, investors are closely monitoring the FOMC’s tone.

“We have noted before that investors tend to start worrying about a US rate hike about five to six weeks before the quarterly FOMC meetings that have press-conferences,” Citi said.

“Despite the soft ECI (employment cost index) data overnight, expectations for further evidence of labor market tightness and wage inflation likely remain entrenched. Thus, any hawkish shift in the statement tonight could trigger a repricing, not only of the probability of a March hike but potentially also of the start of the Fed’s balance sheet unwind.”

BofA Merrill Lynch expects the FOMC to “sound modestly more hawkish, noting the decline in labor utilization and improvement in confidence.” It does not expect any change in interest rates or the reinvestment policy for now.

At the local market, the day’s decline was led by the financial, services and property counters while the industrial, holding firms and mining/oil counters firmed up.

Foreign investors were net sellers amounting to P567 million.

Value turnover for the day amounted to P5.11 billion. There were 96 advancers that edged out 83 decliners while 54 stocks were unchanged.

Dealers said it’s time for some correction this February after the sharp rally seen in January.

Investors dumped shares of BDO, GT Capital, Ayala Land, URC, Security Bank, PLDT and Globe, which all declined by over 1 percent. AEV also slipped.

On the other hand, EDC gained over 3.48 percent while Metrobank, Ayala Corp. and SM Investments all advanced by over 1 percent.

ICTSI, SM Prime, AP and BPI also gained.

While investors dumped large cap stocks, they picked up stocks outside the PSEi. Arthaland Corp. surged by 18.52 percent while SBS rose by 6.69 percent in relatively heavy volume. They were among the day’s most actively traded stocks. Cosco, the holding firm of businessman Lucio Co, was likewise up by 1.74 percent while retailer RRHI firmed up by 0.19 percent.