PSEi drops further after release of Fed minutes

Philippine shares declined further on Thursday as minutes of the US Federal Reserve’s June meeting supported expectations of further rate hikes this year.

The Philippine Stock Exchange index (PSEi) dropped by 38.13 points or 0.58% to 6,474.26 on Thursday, while the broader all shares index declined by 13.82 points or 0.39% to 3,455.93.

“The index fell as investors turned negative after a review of the minutes of the Federal Reserve’s June meeting reaffirmed the hawkish trajectory of US monetary policy,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“The lack of sustained market strength even after the release of the Philippine June inflation print shows traders have already priced in the deceleration of domestic inflation and are looking for other news to drive stock prices,” Mr. Colet added.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said in a Viber message that market sentiment was affected by the minutes of the Fed’s meeting last month.

A united US Federal Reserve agreed to hold interest rates steady at the June meeting as a way to buy time and assess whether further rate hikes would be needed, even as the vast bulk expected they would eventually need to tighten policy further, according to meeting minutes released on Wednesday, Reuters reported.

While “some participants” wanted to move ahead with a rate hike in June because progress in cooling inflation had been slow, “almost all participants judged it appropriate or acceptable to maintain” the federal funds rate at the existing 5% to 5.25%, the minutes said.

Meanwhile, headline inflation slowed to 5.4% in June from 6.1% in May 2023 and June 2022, but marked the 15^th straight month that the consumer price index exceeded the Bangko Sentral ng Pilipinas’ 2-4% target for the year.

For the first six months, inflation averaged at 7.2%, still higher than the central bank’s 5.4% forecast for 2023.

All sectoral indices declined on Thursday except for financials, which went up by 3.71 points or 0.2% to 1,842.45.

Meanwhile, property went down by 45.91 points or 1.73% to 2,597.75; services dropped by 15.93 points 1.01% to 1,555.90; holding firms fell by 30.15 points or 0.46% to 6,450.40; industrials declined by 9.16 points or 0.1% to 9,159.14; and mining and oil lost 4.66 points or 0.04% to end at 9,896.59.

Value turnover increased to PHP 4 billion on Thursday with 745.77 million shares changing hands from the PHP 3.82 billion with 522.37 million issues seen on Wednesday.

Decliners outnumbered advancers, 100 versus 73, while 51 names closed unchanged.

Net foreign selling rose to PHP 99.41 million on Thursday from PHP 22.2 million on Wednesday. — A.H. Halili with Reuters