PSEi drops on profit taking as Fed rate cut looms

Philippine stocks closed lower Wednesday due to last-minute profit-taking as the market awaited the US Federal Reserve’s policy decision.

The benchmark Philippine Stock Exchange index (PSEi) slipped by 0.27% or 19.46 points to end at 7,155.90 on Wednesday, while the broader all shares index declined by 0.05% or 2.21 points to close at 3,847.96.

The PSEi climbed to as high as 7,219.17 intraday, but investors pocketed some of their profits, causing the index to end lower compared to Tuesday’s close.

“Last-minute profit-taking sent the local market lower this Wednesday. Investors booked gains following the bourse’s two-day rally,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors also took a cautious stance while waiting for the Fed’s policy decision.”

“The PSEi snapped its two-day winning streak as traders awaited the Fed’s rate cut decision, with a 63% chance of a 50-bp cut. However, some investors are concerned that a larger-than-expected cut could indicate underlying economic weakness,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Asian stocks struggled as traders weighed the odds of a super-sized Federal Reserve interest rate cut later in the day, Reuters reported.

The chances of the Fed kicking off its easing cycle with a supersized cut of 50 basis points (bps) oscillated in Asia, retreating to 63% early in the day from 67% around the same time on Tuesday, before stabilizing around 65%, according to LSEG data.

Japan’s Nikkei stock average climbed as much as 1.3% early on in reaction to overnight weakness in the yen, but pared those gains to just 0.23% as of 0526 GMT as the currency rebounded.

China’s blue chips slipped 0.18% after coming back online following a holiday-extended weekend, and Taiwan also returned from a day off to tumble 1%. Australia’s benchmark sagged 0.1%.

MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.27%.

Back home, sectoral indices ended mixed. Financials went down by 0.66% or 14.60 points to 2,185.31; services declined by 0.59% or 13.03 points to 2,195.47; and industrials went down by 0.12% or 11.85 points to 9,548.83.

On the other hand, mining and oil climbed by 1.82% or 148.08 points to 8,251.26; property rose by 0.88% or 25.33 points to 2,905; and holding firms inched up by 0.01% or 1.15 points to 6,134.32.

Value turnover declined to PHP 6.14 billion on Wednesday with 879.65 million shares switching hands from the PHP 6.69 billion with 712.81 million issues traded on Tuesday.

Advancers outnumbered decliners, 125 to 68, while 60 issues closed unchanged.

Net foreign buying declined to PHP 773.87 million on Wednesday from PHP 806.45 million on Tuesday. — R.M.D. Ochave with Reuters