Stocks drop further as market waits for catalysts

PHILIPPINE SHARES dropped further on Tuesday due to a lack of positive catalysts and the continuing conflict in the Middle East.

The Philippine Stock Exchange index (PSEi) went down by 48.72 points or 0.8% to close at 6,039.72 on Tuesday, while the broader all shares index shed 18.37 points or 0.55% to end at 3,284.69.

“The local bourse dropped… as many investors are staying on the sidelines while waiting for a positive catalyst. So far, concerns regarding the Israel-Hamas conflict, high interest rates, and elevated inflation continue to exert downward pressure on sentiment,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The local market posted another steep downtick despite the reprieve in the US bond sell-off, which we think underscores investors’ heightened risk-off appetite,” China Bank Securities Corp. Research Associate Lance U. Soledad said in a Viber message.

Israel’s military intensified its assault on Hamas militants in Gaza, as the United States and other global powers called for aid to continue flowing into the besieged strip to prevent an already grave humanitarian crisis from worsening, Reuters reported.

Israel’s military said it had hit more than 400 militant targets in Gaza overnight and killed dozens of Hamas fighters, including three deputy battalion commanders.

Meanwhile, the yield on the benchmark 10-year US Treasury note briefly rose above 5% on Monday before quickly declining. In Asian hours, the yield was up 1 basis point to 4.848% on Tuesday.

The runup in yields on the 10-year Treasury note, seen as a safe haven in times of economic uncertainty and a benchmark for borrowing costs around the world, has been driven by investors pricing in stronger US growth as well as the need for more bonds to be issued to fund higher government spending.

Philippine shares were “dragged by mounting concerns about the state of the broader economy,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“On the economic front, traders await latest data about the services and manufacturing sectors,” Mr. Limlingan added.

All sectoral indices dropped on Tuesday. Services fell by 19.81 points or 1.32% to 1,477.22; property shed 22.10 points or 0.85% to 2,572.41; holding firms declined by 46.37 points or 0.79% to 5,782.40; mining and oil went down by 77.64 points or 0.77% to 9,950.73; financials dropped by 6.43 points or 0.37% to 1,712.20; and industrials decreased by 25.88 points or 0.29% to 8,638.32.

Value turnover went down to P2.57 billion on Tuesday with 275.90 million shares changing hands from the P3.30 billion with 551.51 million issues seen on Monday.

Decliners outnumbered advancers, 100 versus 72, while 57 shares closed unchanged.

Net foreign selling went down to P633.34 million on Tuesday from P777.62 million on Monday. — SJT with Reuters