Stocks drop on profit taking after Monday rally

PHILIPPINE STOCKS closed lower on Tuesday on profit taking after the main index hit the 7,000 level for the first time since April 2022 on Monday and ahead of the resumption of trading on Wall Street.

The benchmark Philippine Stock Exchange index (PSEi) went down by 31.44 points or 0.44% to close at 7,014.04 on Tuesday, while the broader all shares index lost 17.23 points or 0.46% to end at 3,657.92.

“Investors cashed in after the index touched the 7,000 level [on Monday] and ahead of the resumption of trading in the US,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

On Monday, the PSEi closed at 7,045.48, which was its best finish since 7,061.49 on April 21, 2022.

Wall Street was also closed on Monday in observance of Martin Luther King, Jr. Day.

“Despite selling pressure coming from the three-day rally, the PSEi managed to stay just above the 7,000 level, as positive market sentiment continues following expectations that central banks would slow interest rate hikes throughout the year,” Unicapital Securities, Inc. Equity Research Analyst Neil Andrew L. Maderaje said in a Viber message.

Slower US consumer inflation in December has boosted hopes that the US Federal Reserve could consider slower rate increases as early as its first meeting for the year on Jan. 31 to Feb. 1.

The US central bank raised borrowing costs by 425 basis points (bps) last year, which brought the federal funds rate to 4.25-4.5%.

Meanwhile, at home, Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla last week said the central bank is likely to raise benchmark interest rates by 25 or 50 bps at its meeting on Feb. 16 amid the need to anchor inflation expectations.   

The BSP raised borrowing costs by a total of 350 bps last year to tame inflation. This brought its policy rate to a 14-year high of 5.5%.

Most sectoral indices closed lower on Tuesday except for property, which went up by 34.26 points or 1.11% to 3,098.25, and services, which gained by 3.81 points or 0.22% to 1,729.07.

Meanwhile, industrials lost 133.23 points or 1.33% to close at 9,872.57; holding firms went down by 71.09 points or 1.03% to 6,799.43; financials decreased by 13.39 points or 0.72% to 1,828.07; and mining and oil slipped by 63.73 points or 0.55% to end at 11,393.90.

Value turnover went down to PHP 10.14 billion on Tuesday with 1.25 billion shares changing hands from the PHP 10.23 billion with 1.11 billion issues traded on Monday.

Decliners outnumbered advancers, 111 versus 77, while 38 names closed unchanged.

Unicapital Securities’ Mr. Maderaje said global economic developments will continue to drive the market, with the investors also waiting for the release of full-year 2022 Philippine gross domestic product data on Jan. 26.

“We expect the PSEi to move sideways this week, further testing 6,800 points as a new support level,” he added. — Justine Irish D. Tabile