PHL stocks slide as faster US CPI fuels rate worries

STOCKS continued to slide on Monday due to faster US inflation in May that fueled fears of a more aggressive tightening by the Federal Reserve.

The benchmark Philippine Stock Exchange index (PSEi) sank by 63.03 points or 0.96% to close at 6,467.01 on Monday, while the broader all shares index went down by 37 points or 1.05% to 3,474.93.

“Philippine shares slid once again after a highly anticipated US CPI (consumer price index) report showed a faster-than-expected rise in prices and consumer sentiment hit a record low. For this week, traders appeared to be preparing for more aggressive Fed responses to the surge in prices. The central bank is expected to announce at least a half-point rate hike at its meeting this coming June 15,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Global equities plunged after Friday’s above-consensus US inflation numbers for May. The repercussion is that the US inflation has not peaked and a more aggressive monetary tightening may be in play. Meanwhile, the US Fed is also expected to announce its interest rate decision later this week which could continue to add uncertainties to the market,” Papa Securities Corp. Equities Strategist Manny P. Cruz said in a Viber message.

The US consumer price index increased by a faster-than-expected 8.6% last month, the largest year-on-year increase since December 1981, according to US Labor Department data released on Friday, showing inflation has yet to peak.

This caused renewed bets of aggressive action from the Fed that could dampen growth prospects for the world’s largest economy.

The US central bank kicked off its tightening cycle with a 25-basis-point (bp) increase in March followed by a 50-bp hike last month as inflation continued to reach multi-year highs.

Mr. Cruz added that major markets in the region also posted sharp losses in reaction to the poor performance of Wall Street last week.

MSCI’s benchmark Asia-Pacific equity index slumped 2.66% on Monday.

Back home, all sectoral indices ended on Monday’s trading session in the red.

Mining and oil dropped by 313.07 points or 2.64% to 11,543.49; services fell by 31.37 points or 1.75% to 1,753.76; holding firms declined by 99.50 points or 1.65% to 5,928.43; financials gave up by 12.08 points or 0.76% to 1,561.98; industrials dropped by 24.36 points or 0.26% to 9,053.56; and property lost 1.07 points or 0.03% to end at 3,044.91.

Decliners overwhelmed advancers, 146 versus 43, while 39 names ended unchanged.

Value turnover ended lower at P5.38 billion on Monday with 761.72 million shares changing hands from the P6.02 billion with 661.18 million issues seen the previous trading day.

Net foreign selling retreated to P624.30 million on Monday from the P1.25 billion seen on Friday. — Luisa Maria Jacinta C. Jocson