PSE index falls on profit taking after Fed meeting

THE MAIN INDEX closed below the 7,000 level on Thursday on profit taking after surging the day prior and as the US Federal Reserve raised rates by 25 basis points (bps) at its policy meeting this week.

The bellwether Philippine Stock Exchange index (PSEi) went down by 49.57 points or 0.7% to close at 6,986.19 on Thursday, while the broader all shares index inched down by 3.39 points or 0.09% to end at 3,683.78.

“The local bourse pulled back this Thursday by 49.57 points or 0.7% to 6,986.19 on the back of profit taking. Investors booked gains from the market’s steep rally yesterday,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“It is a sell on news kind of scenario due to news prior to the announcement of the Fed that they will be increasing 25 bps, which they did,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message.

Mr. See said investors were also preparing for the PSEi’s rebalancing.

“There are funds started buying or selling to adjust their fund composition to the index,” he added.

On Wednesday, the Fed raised the target interest rate by 25 bps or a quarter of a percentage point, with a promise of more increases in borrowing costs in its fight against inflation, Reuters reported.

The rate hikes imposed by the Fed since March 2022 have now totaled 4.5 percentage points, with the policy rate now in a range between 4.5% and 4.75%, the highest since 2007.

The Fed statement indicated that any future rate increases would be in quarter-percentage-point increments, dropping a reference to the “pace” of future increases and instead referring to the “extent” of rate changes.

Meanwhile, the local bourse operator announced last week that DMCI Holdings, Inc. and UnionBank of the Philippines, Inc. will replace Megaworld Corp. and Robinsons Land Corp. in the main board on Feb. 6.

Majority of the sectoral indices closed higher on Thursday, except property, which went down by 50.22 points or 1.65% to 2,985.19, and holding firms, which lost 109.59 points or 1.59% to end at 6,772.08.

Meanwhile, mining and oil climbed by 331.27 points or 3.04% to 11,226.07; services went up by 13.20 points or 0.74% to 1,779.30; industrials increased by 24.22 points or 0.24% to 9,948.82; and financials rose by 3.65 points or 0.19% to 1,843.15.

Value turnover went down to PHP 8.93 billion on Thursday with 1.29 billion shares changing hands from the PHP 8.99 billion with 1.06 billion issues traded on Wednesday.

Advancers outnumbered decliners, 114 versus 67, while 56 names closed unchanged.

Net foreign buying declined to PHP 96.46 million on Thursday from the PHP 763.97 million seen the previous trading day. — Justine Irish D. Tabile with Reuters