Stocks drop on expectations of faster March CPI

Philippine shares ended lower on Monday as investor sentiment was hampered by expectations of quicker inflation this month, which could delay the central bank’s interest rate cuts.

The benchmark Philippine Stock Exchange index (PSEi) fell by 0.42% or 28.87 points to end at 6,853.10 on Monday, while the broader all shares index dropped by 0.27% or 9.69 points to close at 3,578.21

“The market is down on jitters ahead of the expected inflation uptick for March and the Bangko Sentral ng Pilipinas’ (BSP) policy reaction come April 8 Monetary Board meet,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.

BSP Governor Eli M. Remolona, Jr. last week said headline inflation may have accelerated further to 3.9% this month from 3.4% in February.

This is in line with the central bank’s projection that the consumer price index (CPI) could quicken anew in the coming months amid a low base and the expected impact of El Niño on food prices.

Analysts said faster CPI could prompt the BSP to delay its easing cycle.

The Monetary Board kept its policy rate at a near 17-year high of 6.5% for a third straight meeting in February after it raised borrowing costs by a cumulative 450 basis points from May 2022 to October 2023.

AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message that stocks ended lower on Monday due to the shortened trading week, as the market will be closed on Thursday and Friday in observance of Holy Week.

“Liquidity might not be present for the meantime, which could lead to a minor correction up to 6,800. But this is a chance to buy before we soar to a new high, breaking the hard 7,000 resistance level by April,” Mr. Vistan said.

Meanwhile, Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message that the local bourse fell due to the peso’s recent depreciation against the dollar.

“The local bourse declined… as both local and overseas investors monitored the inflation rate in the region,” she added.

Almost all of the market’s sectoral indices closed lower, with holding firms being the lone gainer, rising by 0.1% or 6.74 points to 6,437.50.

Meanwhile, financials dropped by 0.87% or 17.86 points to 2,033.28; industrials declined by 0.71% or 64.37 points to 8,958.11; mining and oil retreated by 0.67% or 55.79 points to 8,182.31; services went down by 0.34% or 6.32 points to 1,832.68; and property decreased by 0.29% or 8.33 points to 2,781.76.

Value turnover fell to PHP 5.49 billion on Monday with 553.24 million issues changing hands from the PHP 5.86 billion with 540.43 million shares traded on Friday.

Decliners beat advancers, 113 against 82, while 48 issues were unchanged.

Net foreign selling went down to PHP 246.47 million on Monday from the PHP 570.66 million recorded on Friday. — R.M.D. Ochave