August 30, 2022

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Stocks fall on rate hike worries, profit taking

STOCKS fell on Tuesday as the local market reopened after a holiday, with investors pocketing gains amid Wall Street’s decline last week on continued worries over the US Federal Reserve’s policy path.

The benchmark Philippine Stock Exchange index (PSEi) went down by 62.23 points or 0.92% to close at 6,690.27 on Tuesday, while the broader all shares index went down by 28.95 points or 0.80% to 3,548.50.

Philippine financial markets were closed on Monday in commemoration of National Heroes’ Day.

“Philippine shares settled in the red amid mounting concerns over rising rates and tighter US monetary policy, which reflected the blunt remarks made by Fed Chair Powell in the recently held Jackson Hole,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Investors took profit or sold positions due to the sell-off that happened last Friday in the US market,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message.

Wall Street ended Friday with all three benchmarks more than 3% lower following Fed Chairman Jerome H. Powell’s speech on the second day of Fed’s annual Jackson Hole symposium.

On Monday, the Dow Jones Industrial Average fell by 184.41 points or 0.57% to 32,098.99; the S&P 500 lost 27.05 points or 0.67% to 4,030.61; and the Nasdaq Composite dropped by 124.04 points or 1.02% to 12,017.67.

Mr. Powell said the US may see slower economic growth and an increase in unemployment as the central bank continues to raise rates to fight rising inflation.

He said the Fed will raise rates as high as needed and would keep them there “for some time” to bring down inflation, raising bets of another 75-basis-point (bp) hike at the US central bank’s meeting on Sept. 20-21.

The Fed has raised rates by 225 bps so far since March, including back-to-back 75-bp hikes in June and July.

Back home, all sectoral indices ended in the red. Services dropped by 18.81 points or 1.09% to 1,703.68; holdings firms declined by 65.58 points or 1.01% to 6,425.39; financials went down by 15.23 points or 0.93% to 1,621.55; property decreased by 25.63 points or 0.84% to 2,995.54; mining and oil lost 62.58 points or 0.53% to close at 11,752.30; and industrials fell by 51.85 points or 0.52% to 9,823.02.

Decliners outnumbered advancers, 124 versus 58, while 51 names were unchanged.

Value turnover declined to P5.98 billion on Tuesday with 1.26 billion shares changing hands from the P8.82 billion with 1.26 billion issues seen on Friday.

Net foreign selling decreased to P37.36 million on Tuesday from the P85.79 million seen on Friday.

Mercantile Securities’ Mr. See said the PSEi may retest the 6,750 resistance level after it managed to close at the 6,690 area from a low of 6,600. He placed the PSEi’s support at 6,400-6,600 and resistance at 6,700-6,900. — J.I.D. Tabile