Market logs worst 2024 close as US yields surge

The main index logged its lowest close for 2024 thus far on Thursday as the peso hit a new 18-month low due to a surge in US Treasury yields.

The Philippine Stock Exchange index (PSEi) fell by 0.61% or 39.66 points to end at 6,371.75 on Thursday, while the broader all shares index went down by 0.75% or 26.17 points to close at 3,425.57.

This is the PSEi’s worst close so far this year and was its lowest since finishing at 6,255.74 on Dec. 13, 2023.

“The local market dropped following the rise in the US long-term Treasury yields. The climb in yields resulted in the further decline of the Philippine peso against the US dollar, which in turn weighed on the local bourse,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.

“Philippine shares saw another successive sell-off ahead of MSCI rebalancing. Weak US Treasury auction spurred a sell-off in bonds. US equities went on a plunge as higher bond yields fueled pessimism across equity markets,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “The odds for the Federal Reserve to raise rates currently are quite low, but not completely off the table. In any case, the Fed is said to need much evidence before becoming confident to start easing.”

The peso on Thursday hit an intraday low of PHP 58.73 before closing at PHP 58.635 per dollar, down by 21.50 centavos from the previous day. Thursday’s finish was the local unit’s worst showing since Nov. 3, 2022’s PHP 58.80 close.

This came as the dollar held steady on Thursday after rising to a two-week high as a rout in US Treasuries pushed up yields, boosting the currency’s allure, Reuters reported.

The index tracking the US currency against its major peers climbed to 105.18 overnight, the highest since May 14, and was slightly lower at 105.05 in early European trading.

A two-day, 15-basis-point jump above 4.6% for long-term Treasury yields helped push the dollar higher. The rise in yields, which move inversely to prices, has been driven by a spate of stronger-than-expected data, tough words from US Federal Reserve officials, and a run of poorly received bond auctions.

Almost all sectoral indices closed lower. Property went down by 1.49% or 35.84 points to 2,368.91; industrials dropped by 1.27% or 115.24 points to 8,960.88; services retreated by 1.13% or 21.94 points to 1,906.41; mining and oil decreased by 0.69% or 64.53 points to 9,162.03; and financials declined by 0.68% or 13.44 points to 1,938.97.

Holding firms rose by 0.38% or 22.16 points to 5,783.96.

Value turnover rose to PHP 5.9 billion on Thursday with 666.59 million shares changing hands from PHP 5.41 billion with 685.45 million issues on Wednesday.

Decliners overwhelmed advancers, 132 against 57, while 52 names ended unchanged.

Net foreign selling rose to PHP 795.5 million on Thursday from PHP 763 million on Wednesday. — RMDO with Reuters