The local stock market started the week lower after US bourses drop on concern that interest rates will soon go up.
The main index dropped 24.21 points or 0.35 percent to close at 6,827.17 with Holding Firms leading the retreat while only the Property sector managed buck the trend.
Volume fell to 2.43 billion shares worth P5.86 billion as losers overwhelmed gainers 138 to 64 with 50 unchanged.
“Philippine shares slipped to start the week due to hints given by the Fed that interest rate raises could start sooner than expected, stirring concerns among investors,” said Regina Capital Development Corporation Managing Director Luis Limlingan.
He noted that, “Wall St. in fact just had its worst week since October 2020 following the hawkish statement from St. Louis Federal Reserve President Bullard. Bullard thinks the Fed should lift its benchmark interest rate as early as late 2022.”
Philstocks Financial Senior Supervisor for Research Japhet Tantiangco said “Last week, the Fed raised its inflation forecast for the US economy this 2021 from 2.4 percent to 3.4 percent . It also signaled at least two possible rate hikes in 2023.“
He added that, “The detection of new COVID-19 cases in the country with variants also spurred pessimism this Monday.”
AAA Equities Head of Research Chris Mangun said “The market started the week with losses on increased selling pressure amid elevated new COVID-19 cases, although our market did much better than its Asian peers which suffered serious losses, similar to what happened to U.S. equities markets last Friday.”
He added that, “The Bangko Sentral ng Pilipinas (BSP)has an Advisory Committee meeting while its Monetary Board is also set to meet before the end of the week. We believe that our central bank will continue with its supportive policies at least until the end of the year.”
“Investors were eager to unload positions at the beginning of the session which drove prices significantly lower. The PSEi would have ended much lower if buying pressure did not pick up throughout the session,” Mangun observed.