Call for UK snap election adds jitters to PHL financial markets Wednesday

It resulted in the sideways close of the peso against the greenback with Wednesday’s finish at 49.72 from Tuesday’s 49.64. (Photo: Peter Rowley/ Flickr)

MANILA–Britain Prime Minister Theresa May’s call for a snap election in June 2017 fuelled risk aversion in the Philippines’ currency and equities market Wednesday, in line with the output in the region.

It resulted in the sideways close of the peso against the greenback with Wednesday’s finish at 49.72 from Tuesday’s 49.64.

A trader said the dollar strengthened against Asian currencies after investors preferred it over regional units to save their positions on back of increased geo-political concerns overseas.

The Bangko Sentral ng Pilipinas’ (BSP) report about the higher balance of payment (BOP) deficit last March, at USD550 million from month-ago’s USD436 million, also had its undesirable effect on the peso, the trader said.

”The poor performance of the local stocks, triggered by the sentiment about a possible snap election in the UK, increased uncertainty in the domestic front,” the trader said.

The trader said that general sentiment in the Euro Zone grew as a result of the possible snap election in the UK, citing that if May wins, the period of negotiations for the exit of Britain from the European Union (EU) will lengthen .

“If she (May) wins it will afford them a longer time to iron out new UK trade deals on the Brexit,” the trader said, but also pointed out that any election brings uncertainty to markets.

With this new development, the peso opened weaker against the US currency at 49.65 from 49.55 in the previous session.

The peso failed to recover during the trade and weakened further to 49.78, bringing the average for the day at 49.70.

Volume of trade amounted to USD436.5 million, higher than the USD339.4 million a day ago.

The currency pair is forecast to trade between 49.60 and 49.80 Thursday.

Net foreign selling continued in the local equities market and pared 0.87 percent, or 66 points, off the Philippine Stock Exchange index (PSEi) to 7,522.98 points.

All Shares tracked the main index after it fell 0.77 percent, or 34.77 points, to 4,502.07 points.

Only the Financials registered gains among the sectoral indices after it rose 0.04 percent.

Services led the losers with a 1.75 percent decline followed by Holding Firms, 1.005 percent; Industrial, 1.002 percent; Mining and Oil, 0.66 percent; and Property, 0.59 percent.

Volume for the day reached 966.5 million shares amounting to Php 5.56 billion.

Losers led gainers at 125 to 67 while 46 shares were unchanged.