Stocks inch down on weak volume before US CPI

Stocks dropped on Tuesday amid weak trading volume as investors stayed on the sidelines ahead of the release of August US consumer inflation data, which could influence the US Federal Reserve’s policy decision this month.

The Philippine Stock Exchange index (PSEi) went down by 3.54 points or 0.05% to end at 6,230.20 on Tuesday, while the broader all shares index dropped by 4.02 points or 0.12% to close at 3,359.43.

“Market continues to trade sideways with low volume as investors await the economic reports this week by the US government. The result of the reports will give the clearer picture whether the Fed will continue to increase or make a pause on the interest rate,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message.

Value turnover went up to PHP 3.97 billion on Tuesday with 535.63 million shares changing hands from the PHP 3.62 billion with 639.89 million issues seen on Monday.

“The market was initially trading in the green boosted by the anticipation that the Federal Reserve will keep its policy rates unchanged,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar likewise said in a Viber message.

August US consumer price index (CPI) data will be released on Wednesday.

The US CPI rose 0.2% in July, matching June’s gain. On an annual basis, the CPI advanced by 3.2%.

The Fed will hold its policy meeting on Sept. 19-20.

The US central bank raised borrowing costs by 25 basis points (bps) in July, bringing its target rate to a range between 5.25% and 5.5%.

It has hiked rates by 525 bps since it began its tightening cycle in March last year.

“The local bourse experienced a slight dip… as investors took profits on the last minute following its two-day rally. Also, the sentiment was further dampened by the lower FDI (foreign direct investments) net inflows recorded in June,” Ms. Alviar added.

FDI net inflows declined by 3.9% to USD 484 million in June from $503 million in the same month in 2022, central bank data released on Monday showed. This was also 0.6% lower than the $487-million FDI net inflows in May.

For the first half of the year, FDI net inflows dropped by 20.4% to $3.9 billion from $4.9 billion a year ago.

Sectoral indices were split on Tuesday. Services dropped by 15.38 points or 1% to 1,522.72; holding firms declined by 31.77 points or 0.53% to 5,948.01; and property went down by 2.44 points or 0.09% to 2,583.69.

Meanwhile, mining and oil rose by 122.17 points or 1.19% to 10,389.13; financials climbed by 15.27 points or 0.85% to 1,803.53; and industrials went up by 30.71 points or 0.34% to 8,940.87.

Decliners outnumbered advancers, 95 to 79, while 61 names closed unchanged.

Net foreign selling rose to PHP 961.49 million on Tuesday from PHP 504.93 million on Monday. — S.J. Talavera