PH shares down on oil price drop, US rate hike fears

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PHILIPPINE equities lost more than 1 percent in earlier trades on Thursday, as lower crude oil prices and fears of a September interest rate hike in the US prompted a sell-off.

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After descending to the 7,600 territory intra-day, the benchmark PSEi closed at 7,773.31—down 0.18 percent or 14.06 points. The broader All Shares fell by 0.40 percent or 18.53 points to 4,615.35.

“Philippine markets were mostly lower on September’s first trading day, with the sentiment weighed by sharp overnight declines in oil prices and . . . traders shrugged off a better-than-expected reading on China’s manufacturing sector,” Luis Limlingan, managing director of Regina Capital Development Corp., said in a text message.

“The price of oil dropped more than 3 percent after the US government said crude oil stockpiles grew more than expected last week, while gasoline stockpiles didn’t shrink as much as investors expected,” he added.

Investors were also factored in a possible interest rate hike this month in the US, with investors closely eyeing the US non-farm payroll (NFP) report.

“The same sentiment may continue tomorrow as investors will be looking ahead to Friday’s key non-farm payroll report. Stocks traded lower all day and fell for the fifth time in the last six days,” Limlingan noted.

The question now being entertained by the market revolves on the likelihood of higher interest rates in the USA, and how such development would impact on the seasonally uptrend during the “ber months.”

“If the NFP report favors a rate hike, then the sell-off may persist until the FOMC [Federal Open Market Committee] … announcement on September 22. After the announcement, then the market will take its cues from there.”

Over 2.13 billion shares were traded, amounting to P9.74 billion. Losers outweighed gainers, 121 to 82, while 41 issues were unchanged.

On Wednesday, PSEi dipped 0.10 percent or 7.56 points to 7,787.37. The All Shares declined by 0.05 percent or 2.34 points to 4,633.88.

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