NextGen Day

MANILA, Philippines — The local stock exchange closed lower at the start of the week on Monday, following another increase in the US inflation rate in May, while the peso remained sideways versus the US dollar, hovering around the 53-level.

The Philippine Stock Exchange index (PSEi) dropped 0.97 percent to 6,467.01 points.

The Dow Jones Industrial Average fell 1.05 percent, or 37 points, to 3,474.93 points.

All of the sector’s indices ended the day in the red, with Mining and Oil leading the way with a 2.64 percent drop.

Services came in second with 1.76 percent, followed by Holding Firms with 1.65 percent, Financials with 0.77 percent, Industrial with 0.27 percent, and Property with 0.04 percent.

With 761.72 million shares worth PHP5.38 billion traded, volume remained light.

At 146 to 43, decliners outnumbered advancers, with 39 shares remaining unchanged.

“Philippine stocks fell once more after a highly anticipated US CPI (consumer price index) report revealed a faster-than-expected rise in prices and consumer sentiment fell to a new low,” said Luis Limlingan, head of sales at Regina Capital Development Corporation (RCDC).

The rate of inflation in the United States increased to 8.6% in May, the highest since 1981. This is higher than the previous month’s 8.3 percent but lower than the 8.5 percent seen in March.

“Traders appeared to be prepared for a more aggressive Fed (Federal Reserve) response in the jump in prices,” Limlingan added, stressing that the Fed is expected to announce another 25 basis point rate hike during the Federal Open Market Committee (FOMC) meeting on June 15.

The Federal Reserve’s key rates were raised by 25 basis points in March and 50 basis points in May of last year in an attempt to slow the country’s rising inflation rate.

Market emotions were affected by the projected hikes in Fed rates as a result of another increase in the US inflation rate, according to Japeth Tantiangco, the senior research analyst at Philstocks Financial Inc. (Philstocks).

The devaluation of the local currency, according to Tantiangco, also contributed to the negative feelings in the local stock market.

“Trading was modest despite persisting uncertainty,” he added, noting that net value turn-over was PHP5.12 billion, down from the year-to-date average of PHP6.82 billion.

Meanwhile, after weakening to 53.00 on Friday, the peso finished the day sideways at 53.3 against the US dollar.

It started the day at 53.1 and fluctuated between 53.3 and 53.1 throughout the day. For the day, the average level was 53.249.

Volume was USD685.2 million, down from USD949.3 million the previous day.

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