PH stocks index, peso weaken after fresh Fed rate hike

The average inflation to date stood at 5.1 percent, way above the government’s 2 percent to 4 percent average target band until 2024. (Pexels photo)

MANILA – Another 75 percent rise in the Federal Reserve’s key rates and indications for more rate hikes in the coming months weakened both the local bourse’s main index and the peso on Thursday.

The Philippine Stock Exchange index (PSEi) shed by 0.81 percent, or 50.13 points, to 6,156.11 points.

All Shares followed with a decline of 0.59 percent, or 19.18 points, to 3,257.83 points.

Most of the sectoral gauges also finished the day in the negative territory – Holding Firms, 1.73 percent; Industrial, 1.03 percent; Property, 0.76 percent; and Financials, 0.57 percent.

On the other hand, Mining and Oil rose by 1.96 percent and Services by 1.27 percent.

Volume was thin at 430.75 million shares amounting to PHP4.45 billion.

Decliners led advancers at 114 to 61, while 37 shares were unchanged.

Luis Limlingan, Regina Capital Development Corp. head of sales, said the main index’s slide is in line with its counterparts in the region after the latest Federal Reserve rate hike.

“Initially, the indices were up during the day but gains were reversed when Fed Chair Jerome Powell said it was ‘premature’ to talk about a rate hike pause and that the terminal rate would likely be higher than previously stated,” he said.

For Friday, among the economic reports that investors are awaiting are those on the US’ October 2022 non-farm payrolls and last month’s domestic inflation rate.

Limlingan said the country’s October inflation rate likely reached 7 percent.

The rate of price increases in the country posted its highest since October 2018 last September when it rose to 6.9 percent, a reversal after its deceleration to 6.3 percent in the previous month.

The average inflation to date stood at 5.1 percent, way above the government’s 2 percent to 4 percent average target band until 2024.

Meanwhile, the local currency depreciated to 58.80 to the greenback from its 58.47 close the previous day.

It opened the day at 58.40, slipping from Wednesday’s 58.05.

It traded between 58.87 and 58.30, bringing the day’s average to 58.66.

Volume reached USD847.7 million, up from USD844.15 million on Wednesday.

Aside from the impact of the Fed rate hike, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the increase in the government’s outstanding debt also hurt the peso during the day.

The Bureau of the Treasury reported the jump in the national government’s liabilities to a record high of PHP13.517 trillion as of September 2022.

Ricafort projected the peso to trade between 58.65 and 58.85 to the US dollar on Friday.