PSEi tracks Wall Street’s decline on rate concerns

PHILIPPINE STOCKS dropped on Wednesday after Wall Street declined due to fears of bigger rate hikes in the United States to control inflation.

The benchmark Philippine Stock Exchange index (PSEi) went down by 101.73 points or 1.49% to end at 6,699.23 on Wednesday, while the broader all shares index lost 42.25 points or 1.16% to close at 3,579.36.

“The PSEi tumbled for the day… as it tracked offshore markets’ weakness given prospects of higher interest rates,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail.

“The local bourse plummeted, tracking US markets, as global sentiment turned south on a combination of increasing rate hike worries, renewed recession uncertainties abroad and fears of a potential escalation in Ukraine-Russia war following Putin’s state of the union speech,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.

Wall Street posted its worst performance of the year on Tuesday, with the main benchmarks ending down as investors interpreted a rebound in US business activity in February to mean interest rates will need to stay higher for longer to control inflation, Reuters reported.

The Dow Jones Industrial Average fell 697.1 points or 2.06% to 33,129.59; the S&P 500 lost 81.75 points or 2% to 3,997.34; and the Nasdaq Composite dropped 294.97 points or 2.5% to 11,492.30.

The falls came after the S&P Global Purchasing Manufacturer’s index, which reflects business activity in the United States, returned to expansion for the first time in eight months in February. The 50.2 reading, up from 46.8 in January, was buoyed by a robust services sector, according to a survey.

Meanwhile, on Tuesday, Russian President Vladimir V. Putin delivered a warning to the West over Ukraine by suspending its last major nuclear arms control treaty with the United States.

Back home, all sectoral indices closed lower on Wednesday. Property fell by 54.57 points or 1.84% to 2,907.62; financials lost 32.30 points or 1.75% to end at 1,807.94; industrials dropped by 124.51 points or 1.27% to 9,613.78; mining and oil shed 134.80 points or 1.2% to close at 11,093.83; holding firms went down by 75.61 points or 1.15% to 6,464.93; and services declined by 18.52 points or 1.10% to 1,665.47.

Value turnover went up to PHP 4.93 billion on Wednesday with 1.34 billion shares changing hands from the PHP 3.52 billion with 611.20 million issues traded on Tuesday.

Decliners outnumbered advancers, 134 versus 45, while 43 names closed unchanged.

Net foreign selling surged to PHP 752.34 million on Wednesday from PHP 150.30 million on Tuesday.

“We think [Wednesday]’s market weakness could remain through [Thursday], leading the index to test the 6,600-6,640 support levels,” China Bank Securities’ Mr. Mercado said.

Mercantile Securities Corp. Head Trader Jeff Radley C. See put the PSEi’s support at 6,388-6,656 and resistance at 6,815-6,932, while AP Securities’ Mr. Temporal placed support at 6,650 and resistance at 6,840. — A.E.O. Jose with Reuters