Risk-off sentiment pull down local markets

Thus, market players now expect the Committee to announce a hike after its meeting on December 18-19, 2018 after US monetary officials have noted that the labor market continues to strengthen and economic activity is still on an upward trajectory. (Photo: qvist / ShutterStock)

MANILA — Expectations of further increases in the US Federal Reserve’s key rates along with drop of prices of oil in the international market weighed down both the Philippine peso and the Philippine Stock Exchange index (PSEi) Monday.

The peso finished the day at 53.295 from 52.96 to a greenback Friday last week.

“It’s more about bets of US rate hikes ahead due to higher-than-expected US PCE inflation and consumer sentiment,” Landbank market economist Guian Angelo Dumalagan said in a reply to an e-mail from the Philippine News Agency (PNA).

The Federal Open Market Committee (FOMC), in its meeting last Nov. 7-8, kept the Fed’s key policy rates but indicated upward adjustments in the coming days.

Thus, market players now expect the Committee to announce a hike after its meeting on December 18-19, 2018 after US monetary officials have noted that the labor market continues to strengthen and economic activity is still on an upward trajectory.

Aside from rate hike expectations, Dumalagan said “many are also expecting strong US consumer price inflation later this week.”

US’s Bureau of Labor Statistics is scheduled to report the October 2018 inflation on Wednesday.

Last September, US’s 12-month inflation stood at 2.28, within the Fed’s long-term target of 2 percent.

This, economists have said, is the reason for expectations for additional increase in the Fed’s key policy rates.

For the day, the peso opened at 53.09, weaker than the 52.87 level in the previous session.

It traded between 53.3 and 53.09, resulting to an average of 53.203.

Volume reached USD666.1 million, lower than the USD897.5 million in the previous session.

Relatively, the main equities gauge fell 0.61 percent, or 42.62 points, to 6,926.20 points.

Regina Capital Managing Director Luis Limlingan attributed this to further decline of oil prices and the lower close of the European and US stocks last week.

Concerns on Italy and the Brexit added to risk-off sentiment, he said.

With these, most of the other counters also finished the day on the red, with the All Shares down by 0.40 percent, or 16.91 points, to 4,252.97 points.

Industrial registered the highest drop with 1.07 percent and was followed by the Holding Firms, 0.95 percent; Financials, 0.57 percent; and Services, 0.48 percent.

On the other hand, Mining and Oil rose 0.47 percent and Property, 0.24 percent.

Volume reached 883.54 million shares amounting to PHP6.64 billion.

Losers led gainers at 127 to 68 while 44 shares were unchanged.