PSEi retreats on Fed rate worries

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The Philippine Stock Exchange index (PSEi) took a cue from developments in overseas markets, closing Wednesday’s session below 7,800 points after a sell-off in US markets overnight.

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The benchmark index slipped 0.48 percent, or 37.78 points to close at 7,790.70, while the broader All Shares index was down 0.66 percent, or 30.15 points, at 4,523.62.

“We followed suit after Wall Street’s movement as speculation on the timing of Fed’s interest rate hike pushed the US dollar to its 12-year high against the euro and pulled the Dow Jones Industrial Average and S&P downward,” Joyce Anne Ramos, AB Capital Securities Inc. analyst, said.

Overnight the Dow shed 332.78 points, S&P 500 lost 35.27 points, and the Nasdaq registered a 82.64-point decline.

“In the coming days, we expect the PSEi to continue its consolidation between the 7,760 and 7,865 levels,” she said.

Regina Capital Development Corp. Managing Director Luis Limlingan said the drop in Wednesday’s session was “anticipated,” given declines on the US markets overnight.

Concern over the US Federal Reserve’s possible decision to hike interest rates has taken a toll on investor sentiment, noting higher interest rates will lead to a “more expensive cost to do business in other countries,” Limlingan said.

Limlingan also cited Chinese factory output data, saying that global investors balked at the 6.8 percent growth rate for January and February, which was nearly a full percentage point lower than the consensus expectation of 7.7 percent growth.

“I think in the next few days, the market will draw more from economic data overseas. Also, everyone is on the lookout how China will respond to more aggressive measures to meet their 7 percent GDP [gross domestic product]target,” he said.

Overseas reports said the unmet factory production target in China “surprised the market on the downside by a large margin,” raising speculations that China’s first quarter GDP growth will likely drop to below 7 percent.

“But the local market is still on an upward trend. Our main support is at 7,730 and resistance is at 7,850, which is already at the upper end of the trading band,” Limlingan said.

The entire subindices board ended Wednesday in bloody red, led by the 1.06-percent decline of the industrials index.

Among the most actively traded issues, Ayala Land Inc., Alliance Global Group Inc., Universal Robina Corp. and Ayala Corp. all posted gains on Wednesday. Top decliners on the day were Global Ferronickel Holdings Inc., Energy Development Corp. and Metropolitan Bank and Trust Co.
Total volume stood at 1.96 billion shares, valued at P8.31 billion.

Decliners outnumbered advancers 3 to 1, 130 to 45, while 47 issues were unchanged.

On Tuesday, the bellwether PSEi firmed 0.10 percent, or 8.19 points, to 7,828.48, while the All Shares index added 0.18 percent, or 8.40 points, to 4,553.77.

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