Stocks inch lower on last-minute profit taking

Philippine stocks slipped on Wednesday due to last-minute profit-taking after the main index breached the 7,000 level intraday and following two consecutive days of gains.

The bellwether Philippine Stock Exchange index (PSEi) dropped by 0.22% or 15.40 points to end at 6,958.01 on Wednesday, while the broader all shares index fell by 0.04% or 1.73 points to close at 3,759.55.

The PSEi opened the session at 6,985.56, higher than Tuesday’s close of 6,973.41. It climbed to an intraday high of 7,016.04 but was unable to hold on to its gains, closing at its lowest level for the day.

“Late-day profit-taking brought the local market down. Investors booked gains after the market climbed for two straight days. Chart-wise, the market retested but still failed to take its 7,000 resistance level,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

Trading was “lethargic,” he added.

Value turnover declined to PHP 5.34 billion on Wednesday with 1.27 billion shares changing hands from the PHP 6.8 billion with 831.25 million issues traded on Tuesday.

“Investors are watching out for more economic data that will reinforce a potential rate cut in September. The prospect of easing monetary policy has many investors taking positions, reflecting broader market cautious optimism both locally and globally,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Investors are unanimous in bets that the US Federal Reserve will begin cutting interest rates next month following Fed Chair Jerome H. Powell’s dovish tilt last week, with the debate now centered on whether or not it will be a super-sized 50-basis-point (bp) cut, Reuters reported.

The current pricing sits at a 36% chance for the larger cut, up from 29% a week ago, according to the CME Group’s FedWatch Tool. Markets, which are fully priced for a 25-bp cut next month, see just over 100 bps worth of easing by the end of the year.

A preliminary estimate for US gross domestic product in the second quarter is due later this week, along with the core personal consumption expenditures index, the Fed’s preferred inflation measure.

Sectoral indices were mixed on Wednesday. Services went down by 0.73% or 16.29 points to 2,212.82; holding firms dropped by 0.53% or 31.36 points to 5,833.03; and property declined by 0.42% or 11.87 points to 2,766.26.

On the other hand, mining and oil rose by 0.85% or 69.48 points to 8,235.68; industrials went up by 0.69% or 63.73 points to 9,301.35; and financials climbed by 0.57% or 12.29 points to 2,133.71.

“Nickel Asia Corp. was the top index gainer, jumping 4.92% to PHP 3.41. PLDT Inc. was the main index laggard, falling 3.14% to PHP 1,511,” Mr. Tantiangco said.

Advancers outnumbered decliners, 99 versus 90, while 54 names were unchanged.

Net foreign buying declined to PHP 687.06 million on Wednesday from PHP 897.83 million on Tuesday. — R.M.D. Ochave with Reuters