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Expectations of Fed rate hikes cause the stock market index and the peso to fall.

MANILA – Risk-off sentiments swept the local bourse on Wednesday, resulting in a negative close for all shares, as well as the peso, on rumors that the Federal Reserve will take a more aggressive tightening stance.

The Philippine Stock Exchange index (PSEi) fell 46.81 points, or 0.65 percent, to 7,109.26.

The Dow Jones Industrial Average fell 0.45%, or 16.94 points, to 3,780.49 points.

Holding Firms saw the highest decrease of all the sectors counters, falling 1.23 percent.

Services came in second with 0.52 percent, followed by Financials with 0.33 percent, Property with 0.26 percent, Mining and Oil with 0.23 percent, and Industrial with 0.05 percent.

The total number of shares traded was 11.53 billion, worth PHP4.98 billion.

At 102 to 79, decliners outnumbered advancers, with 51 shares unchanged.

The PSEi’s negative close was connected to news quoting Federal Reserve Governor Lael Brainard as indicating that the Fed could adopt a more aggressive approach to policy rate hikes, according to Luis Limlingan, head of sales at Regina Capital Development Corporation (RCDC).

“On top of that, recessionary fears continued to frighten investors as Deutsche Bank became the first big Wall Street bank to predict a US recession, citing the Fed’s increased aggressiveness in combating inflation,” he said.

The Federal Reserve raised interest rates by 25 basis points last month, the first time since December 2018. The Fed’s key rates now range from 0.25 to 0.50 percent.

Last February, the consumer price index (CPI) in the United States reached a more than four-decade high of 7.9% on an annual basis.

In the meantime, the local currency concluded the day at 51.43 versus the US dollar, down from 51.19 the day before.

It began trading at 51.25 and fluctuated between 51.445 and 51.25 during the day. For the day, the average level was 51.386.

Volume was USD1.26 billion, down from USD1.3 billion the previous day.

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