PSEi slips on Fed rate hike expectations, peso keeps footing

MANILA – Expectations for further hikes in the Federal Reserve’s key rates resulted in the continued drop of the local main equities index on Wednesday but the peso kept its footing against the greenback.

The Philippine Stock Exchange index (PSEi) shed 0.70 percent, or 47.35 points, to 6,709.34 points.

All Shares declined by 0.56 percent, or 19.77 points, to 3,539.46 points.

Most of the sectoral indices also slipped during the day, namely Financials, 1.53 percent; Property, 1.49 percent; Services, 0.59 percent; and Holding Firms, 0.29 percent.

Meanwhile, Industrial rose by 0.38 percent and Mining and Oil by 0.28 percent.

Volume totaled to 1.55 billion shares amounting to PHP7.87 billion.

Decliners led advancers at 101 to 89 while 48 shares were unchanged.

“Philippine shares slumped ahead of earnings season and further expected rate hikes from the Fed (Federal Reserve),” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.

Limlingan also cited the rise in global oil prices on the “US government’s projection that petroleum demand is set to touch a record next year.”

Price of Brent crude oil and West Texas Intermediate (WTI) both rose by 0.6 percent to USD80.10 per barrel and USD75.12 per barrel, respectively.

On the other hand, the peso moved sideways against the US dollar and closed at 54.8 from 54.87 Tuesday.

It opened the day 54.8, an improvement from its 54.95 start a day ago.

It traded between 55.04 and 54.75, resulting in an average of 54.928.

Volume reached a little over USD1 billion from day-ago’s USD 1.07 billion.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the local unit closed to its lowest in over six months or since ending the trade at 54.77 on June 28, 2022 partly due to indications from the Bangko Sentral ng Pilipinas (BSP) that future rate hikes will only be around 25 to 50 basis points and not 75 basis points.

He said a clearer path on the BSP rates, discounting also a rate cut, “could still support/stabilize the peso exchange rate and overall inflation.”

Other factors that buoyed the peso include easing of China’s coronavirus disease 2019 (Covid-19) restrictions, lower year-on-year price of oil in the international market and strong demand for the Philippines’ latest global bond offering.

For Thursday, Ricafort forecasts the peso to trade between 54.70 and 54.90 to a greenback.