The stock market on Wednesday retreated by more than 1 percent in light trading, with analysts describing the local bourse as “resting” while investors set their focus on the Federal Open Market Committee (FOMC) meeting.
The benchmark Philippines Stock Exchange Index (PSEi) fell by 1.16 percent or 82.87 points to end the day at 7,065.39, while the wider All Shares dipped by 0.84 percent or 34.75 points to finish at 4,089.25.
Nisha Alicer, chief equity strategist at DA Market Securities Inc., said in a phone interview that the local bourse’s decline is attributable to investors’ “wait-and-see” attitude amid the ongoing FMOC meeting.
“There is now a renewed focus on the Federal Reserve’s meeting, sentiment is mixed insofar as the Fed’s monetary policy meeting is concerned,” Alicer said.
She noted that the consensus among analysts is that the Federal Reserve is still leaning toward an upward adjustment on their key interest rates, adding, however that “the adjustment could still be delayed [until]later in the year.”
In addition, Alicer said that Wednesday’s trading was anticipated after the market has been overbought since January, when it hit its lowest level this year at 6,084.28.
“The stock market has been overbought since it plunged to its lowest this year, so it was only anticipated that a decline would take place,” she added.
Meanwhile, Jun Calaycay, head of research and marketing at A&A Securities Inc., agreed with Alicer both with regard to the Federal Reserve’s meeting and the expected slowdown in the local market.
“The pause the local market took at mid-week is seen as a healthy rest for prices that have moved strongly north over the last several days. Indeed some room will have to be made and given to profit-taking as the index builds more momentum to break past the 7,200-level,” Calycay said.
He said that the shift from buying to selling could also be partly attributed to a shortened trading week as the country observes Lent.
“A narrative that will probably underline the two final sessions for the week will be the Federal Reserve’s reading of the US economy that will be made public at the conclusion of its two-day meeting,” Calaycay said.
He explained that although the markets are already largely assuming that the Fed will not make any move on interest rates, investors will dissect the post-meeting statement for hints as to the actual health of the economy – or at least how policy-makers see it.
Total value turnover in Wednesday’s trade was low at P6.778 billion, with losers outnumbering winners, 121 to 73, while 30 issues remained unchanged.
All the sub-indices likewise lost ground, except for financials, which managed to inch up 0.57 percent, while the property board incurred the largest drop at 2.26 percent.