PSEi spooked by hawkish Fed chief

Jerome Powell, US Federal Reserve’s new chair (screengrab from Fed website)

The local stock barometer fell sharply on Wednesday as global investors were spooked by the new US Federal Reserve chief’s hawkish tone and the weak factory data out of China.

Tracking the pullback across US and regional markets, the Philippine Stock Exchange index (PSEi) lost 117.09 points or 1.36 percent to close at 8,475.29, wiping out all gains seen this year.

In his testimony before the U.S. House of Representatives’ Financial Services Committee – his first public speaking engagement as the new US Federal Reserve chair, Jerome Powell expressed confidence that “good years” were ahead for he US economy, boosting expectations that there would be no less than four rate increases this year.

Reports that China’s official manufacturing gauge had fallen at the steepest pace in five years also gnawed on investor sentiment.

“Looking forward, we might see more hesitation in the next few weeks, especially if investors anticipate higher inflation in February and rising benchmark rates,” Papa Securities said.

“We might see improvements in the market, however, if inflation does not stray too far from the BSP (Bangko Sentral ng Pilipinas)’s target of 4 percent once data is released this March 6,” the brokerage said.

The PSEi was weighed down most by the interest rate-sensitive property counter, which fell by 2.4 percent, while the holding firm slipped by 1.69 percent.

The financial and services counters also slipped while the industrial and mining/oil counters managed to eke out modest gains.

Total value turnover for the day amounted to P9.97 billion.

There were 111 advancers that edged out 96 decliners while 52 stocks were unchanged.

Investors dumped shares of large-cap stocks like JG Summit, which declined by 4.96 percent, while Ayala Land, SM Investments, SM Prime and PLDT all dropped by over 3 percent.

Ayala Corp., Metro Pacific, URC and Security Bank slipped by over 1 percent, while BDO and Metrobank also declined.

On the other hand, Meralco gained 2.94 percent while Jollibee and GT Capital both added over 1 percent.

Investors also scouted for trading buys outside the PSEi, mostly still related to the third telecom player speculation. MRC allied surged by 17.39 percent and TBDI added 15.38 percent.

Integrated gaming operator Bloomberry added 3.15 percent while PXP rose by 1.89 percent.