The Philippine Stock Exchange index (PSEi) dropped on Thursday, Aug. 28, as investors sold on news that the Bangko Sentral ng Pilipinas (BSP) reduced interest rates as expected.

The main index lost 83.15 points, or 1.33 percent, to close at 6,190.19. Banks led the retreat, while miners bucked the trend. Volume was firm at 953 million shares worth ₱7 billion. Gainers and losers were matched at 99 apiece, with 48 unchanged.

“The PSEi was down after yesterday’s rally, as the market faced some selling pressure. But now, attention shifts to how investors will react to the BSP’s 25-basis-point (bp) rate cut and its implications for equity prices, especially as yields continue to decline while the inflation outlook of the central bank remains steady at 1.7 percent by year-end,” said Regina Capital Development Corp. managing director Luis Limlingan.

Philstocks Financial research manager Japhet Tantiangco said, “Investors booked gains from yesterday’s rally, taking a cautious stance while waiting for clues on the BSP’s policy outlook from their latest meeting. The peso’s weak position against the United States (US) dollar also weighed on the market this Thursday.”

“The PSEi corrected lower despite the widely expected 0.25-percent BSP rate cut to five percent, near three-year lows, that could further reduce borrowing costs for listed companies and for the overall economy,” said Rizal Commercial Banking Corp. chief economist Michael Ricafort.

He added that, “The PSEi also declined lately after [US President Donald J.] Trump’s unprecedented and escalating attack on the Federal Reserve (US central bank) runs the risk of backfiring by hitting financial markets and the economy with higher long-term borrowing costs.”