NextGen Day

The local stock index and the peso, which fell to its nearly 18-year low on Tuesday, were both hurt by risk-off emotions prior to the release of the United States June 2022 inflation report.

In order to reach 6,349.94 points, the Philippine Stock Exchange index (PSEi) lost 0.61 percent or 38.7 points.

To reach 3,409.91 points, All Shares fell by 0.35 percent or 11.87 points.

Holding Firms, 1.49 percent; Services, 1.03 percent; and Property, 0.28 percent, made up half of the sectoral gauges that tracked the primary index.

Financials increased by 0.75 percent, Industrial increased by 0.31 percent, and Mining and Oil increased by 0.96 percent.

955.85 million shares, or 4.2 billion PHP, in thin volume.

At 105 to 82, decliners outnumbered advancers, while 49 shares remained the same.

Headline inflation in the US is anticipated to have increased to roughly 8.8% percent last June from the four-decade high of 8.5 percent in the preceding month, according to Luis Limlingan, head of sales at Regina Capital Development Corporation (RCDC).

According to Limlingan, market participants are getting ready for the season of second-quarter results reports.

The street is debating whether a recession is likely, and market players will be looking for downside risk to earnings predictions as corporations deal with rising interest rates and increased inflationary pressures.

According to Michael Ricafort, chief economist of Rizal Commercial Banking Corporation (RCBC), the peso has weakened to 56.37 against the US dollar, the lowest level since Nov. 5, 2004, when it ended at 56.375.

On Monday, it traded down to 55.979.

The local currency made a good showing after starting the day at 56.13 instead of the previous session’s 55.84.

After falling to 56.45 earlier in the session, the unit’s worst level since October 13, 2004, its opening level was the unit’s strongest for the day.

For the day, the average level was 56.318.

Volume increased from USD804.6 million the day before to USD1.39 billion.

A “record trade deficit on a monthly basis at -USD5.679 billion and the higher US dollar,” according to Ricafort, were to blame for the peso’s fall.

He claimed that the risk-off feelings were also influenced by the upcoming announcement on Wednesday of the US consumer price index (CPI) for June 2022 and anticipation of additional increases in the Federal Reserve’s benchmark interest rates.

However, these factors are offset by the rise in local cases of coronavirus disease 2019 (Covid-19), the decline in oil prices on the global market, and the low US Treasury yields, according to Ricafort.

It’s interesting to notice that the high in 2004–2005 was restricted to 56.40 levels for around two years, he continued.

According to Ricafort, the peso would fluctuate on Wednesday between 56.25 and 56.45 to the US dollar.

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