Shares drop as Powell rules out March rate cut

PHILIPPINE SHARES closed lower on Thursday as US Federal Reserve Chair Jerome H. Powell said they were unlikely to cut rates next month following their policy meeting this week.

The benchmark Philippine Stock Exchange index (PSEi) dropped by 23.43 points or 0.35% to 6,623.01 on Thursday, while the broader all shares index declined by 13.46 points or 0.38% to 3,486.03.

“This Thursday, the local market dropped by 23.43 points to 6,623.01 due to negative spillovers from Wall Street overnight as the Federal Reserve downplayed rate cut hopes for March in its first meeting for the year,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.

“With the current path of inflation in the US, Fed Chair Jerome Powell stated that the committee is not yet confident to cut rates in their next meeting,” he added.

Asian shares faltered on Thursday after Wall Street took a late spill, while investors stuck to bets for sizable cuts in US interest rates this year even if the kickoff might now be a little later than first hoped, Reuters reported.

The Federal Reserve committee’s decision to hold rates at 5.25-5.5% on Wednesday was no surprise, it took a dovish twist by emphasizing that rates would not be cut until it had more confidence that inflation was truly beaten.

In a media conference, Mr. Powell flatly stated a cut as early as March seemed unlikely, but also conceded that everyone on the committee was looking to ease this year.

“Oil prices spiked following the US-Iran conflict. Since Friday, Iran militants have killed three US soldiers, and this development raises crude supply concerns,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.

Most sectoral indices ended lower on Thursday. Mining and oil fell by 135.42 points or 1.46% to 9,111.97; property dropped by 25.13 points or 0.86% to 2,896.36; services went down by 8.83 points or 0.54% to 1,609.46; industrials retreated by 34.67 points or 0.38% to 8,885.31; and holding firms declined by 23.84 points or 0.37% to 6,305.23.

Meanwhile, financials rose by 5.44 points or 0.28% to 1,891.19.

“Among the index members, Century Pacific Food, Inc. was at the top, climbing 3.49% to PHP 34.10. Nickel Asia Corp. lost the most, dropping 2.89% to PHP 4.70,” Mr. Plopenio said.

Value turnover decreased to PHP 4.15 billion on Thursday with 280.66 million issues switching hands from the PHP 6.76 billion with 423.55 million shares traded the previous day.

Decliners outnumbered advancers, 118 to 46, while 55 names closed unchanged.

Net foreign buying climbed to PHP 460.42 million on Thursday from PHP 256.1 million on Wednesday. — R.M.D. Ochave with Reuters