NextGen Day

The main index of the local stock exchange and the peso both closed the week in a sideways trend as their US counterparts declined due, among other things, to signals of recession in the biggest economy in the world.

The PSEi, an indicator for the Philippine Stock Exchange, dropped 5.39 points, or 0.08 percent, to reach 7,056.62 points.

All Shares dropped 3.82 points, or 0.10 percent, to finish at 3,682.86 points.

Half of the sectoral gauges—Services, 0.85 percent; Industrial, 0.54 percent; and Financials, 0.44 percent—also ended the week in the negative.

In contrast, mining and oil increased by 1.32 percent, real estate increased by 0.83 percent, and holding companies increased by 0.35 percent.

1.56 billion shares, or PHP6.86 billion, were traded.

97 shares were up, 86 were down, and 59 were unchanged.

As corporate earnings and economic data point to a faltering economy, Regina Capital Development Corporation (RCDC) head of sales Luis Limlingan noted that “it was a quiet day on the local market following a disappointing performance once again in the US.”

He said that investors “will also listen attentively to statements from Fed (Federal Reserve) officials ahead of the central bank’s February meeting, seeking signals on the amount of the rate hike that’s likely to occur.” Investors, he said, “will also wait and look for fresh corporate earnings reports.

Because of the slowing of inflation in the biggest economy in the world, markets anticipate a raise in the Fed’s key rates of less than 75 basis points at each meeting this year.

Investors are eagerly expecting the release of the local economy’s fourth quarter and annual GDP reports next week, according to Limlingan.

While everything was going on, the market discounted a second straight week of significant increases in US crude stocks, which led to an increase in oil prices on Thursday. This extended a recent surge supported by rising Chinese demand.

West Texas Intermediate (WTI) crude oil futures increased by 1.1 percent to USD80.33 per barrel, while Brent crude oil futures increased by 1.4 percent to USD86.16 per barrel.

The local currency also decreased from 54.63 at the start of the week to 54.54 at the close.

Between 54.83 to 54.44, it moved throughout the day after opening at 54.75. The day’s average level was 54.639.

Volume was USD1.05 billion, down from USD1.25 billion the day before.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), the peso ended sideways in part due to concerns about the US economy going into recession, smaller but ongoing increases in the Federal Reserve and Bangko Sentral ng Pilipinas (BSP) key rates, and a potential reduction in the reserve requirement ratio for domestic banks.

He claimed that the local currency fell for the third consecutive week, in part because of a general fall in the price of crude oil relative to the highs it reached following the Russian invasion of Ukraine in February 2022.

He added that the ongoing reopening of the Chinese economy is also contributing to the optimism, but cautioned that concerns still exist in the wake of the increase in coronavirus disease 2019 (Covid-19) cases in the world’s second-largest economy.

He said that the nation’s long-term interest rate decline, as evidenced by the fall in the central bank’s debt paper instruments, is also bolstering market sentiment.

The local currency is expected to fluctuate between 54.35 and 54.85 over the upcoming week, while the range on Monday is anticipated to be between 54.45 and 54.65.

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