Stocks fell for a third day, dragging the benchmark index to a four-week low, as investors continued to take profit from last month’s substantial gains.
The Philippine Stock Exchange index, the 30-company bellwether, shed 25 points, or 0.3 percent, to close at 8,738.72 Thursday. This trimmed the index’s gains this year to 2.1 percent.
The heavier index representing all shares rose 6 points, or 0.1 percent, to settle at 5,130.92, on a value turnover of P7.3 billion. Advancers outnumbered losers, 113 to 88, while 54 issues were unchanged.
Seven of the 20 most active stocks ended in the green, led by National Reinsurance Corporation of the Philippines which jumped 19.7 percent to P1.52 and MacroAsia Corp. which climbed 10.3 percent to to P23.50.
Meanwhile, the peso declined to a three-month low against the US dollar on the possibility that the US Federal Reserve will raise interest rates more rapidly than expected given the improving economy.
The peso lost P0.29 to close at 51.58 a dollar Thursday, from 51.295 a dollar Wednesday. It was the local currency’s weakest level in three months.
Reports from the US mainland said the Fed might be forced to raise rates more rapidly this year than the market was anticipating due to “accelerating economic conditions.”
A survey conducted by the CNBC showed that gross domestic product growth in the world’s largest economy would increase 2.9 percent from last year.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said the local currency would remain resilient, supported by the country’s solid macroeconomic fundamentals.
“The peso is just fine. Demonstrating flexibility reflecting day-to-day market conditions. There will be volatility, runs and corrections, and the public should plan accordingly and factor in exchange risk in their decisions,” Espenilla said.
He said the peso was not expected to melt down because the underlying economic fundamentals of the economy were healthy.
“We are very far from any foreign exchange crisis given our large GIR [gross international reserves] buffer and secondary buffers as well as investment-grade rating that guarantees ready market access for any official and commercial financing requirement,” he said.
Meanwhile, the dollar ticked up in Asian trade Thursday on expectations the Federal Reserve will speed up interest rate hikes this year.
Eyes are now on the release of US jobs data later in the day, with another strong reading likely adding fuel to talk that US borrowing costs will continue to rise.
After Janet Yellen’s final meeting as governor, the Fed’s policy board said while it remains below target, the bank expects inflation to move up this year and noted economic growth, investment and unemployment were all going in the right direction.
“There was a subtle and distinct upgrade to the language around the expansion in the US economy with employment, household spending, and business fixed investment said to ‘have been solid’,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
The Fed’s comments provided a lift the dollar, although it is still under pressure against most of its peers in recent weeks as central banks around the world look to tighten monetary policy more in line with the US. with AFP
