PH stocks drop further as March US CPI picks up

Philippine stocks closed lower on Thursday following faster-than-expected US consumer inflation last month, which could lead to delayed policy easing by the US Federal Reserve.

The bellwether Philippine Stock Exchange index (PSEi) dropped by 0.94% or 63.42 points to end at 6,677.65 on Thursday, while the broader all shares index retreated by 0.94% or 33.72 points to close at 3,525.87.

“Philippine shares took another plunge as investors assessed a hot US March consumer price index (CPI) reading that fueled worries the Federal Reserve may implement fewer rate cuts than expected,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Negative spillovers from Wall Street driven by the higher-than-expected US inflation for March clouded investors’ sentiment. The bourse was in the red territory for the whole session,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.

US consumer prices increased more than expected in March as Americans continued to pay more for gasoline and rental housing, leading financial markets to anticipate that the Federal Reserve would delay cutting interest rates until September, Reuters reported.

The third straight month of strong consumer price readings reported by the Labor department on Wednesday also suggested that the pickup in inflation in January and February could not be solely attributed to businesses raising prices at the start of the year as economists had argued.

The consumer price index rose 0.4% last month after advancing by the same margin in February, the Labor department’s Bureau of Labor Statistics said.

In the 12 months through March, the CPI increased 3.5%, the most since September. It rose 3.2% in February. Economists polled by Reuters had forecast the CPI gaining 0.3% on the month and advancing 3.4% year on year.

“This Thursday, the local market dropped by 63.42 points (-0.94%) to 6,677.65 as investors took cues from the hawkish pause of the Bangko Sentral ng Pilipinas (BSP) in its recent policy meeting. BSP rate cut hopes were tempered amid mounting inflationary risks at home,” Mr. Plopenio added.

Majority of sectoral indices closed lower. Property went down by 3.54% or 95.33 points to 2,595.55; industrials dropped by 1.19% or 105.18 to 8,697.41; holding firms inched down by 0.95% or 59.86 points to 6,233.91; and services decreased by 0.37% or 6.91 points to 1,855.67.

Meanwhile, financials climbed by 1.09% or 22.15 points to 2,040.69, and mining and oil rose by 1.03% or 84.20 points to 8,223.17.

Value turnover rose to PHP 6.72 billion on Thursday with 747.92 million issues changing hands from the PHP 4.26 billion with 571.46 million shares traded on Monday.

Decliners outnumbered advancers, 134 against 57, while 50 names closed unchanged.

Net foreign selling dropped to PHP 222.65 million on Thursday from PHP 930.83 million on Monday. — R.M.D. Ochave with Reuters