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Friday, May 31, 2024

PH stocks down, take cue from Wall Street’s decline

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LOCAL shares fell for the second day following the decline in US stocks.

The Philippine Stock Exchange index lost 30.82 points, or 0.45 percent, to close at 6,860.67, while the broader all-shares index declined 17.40 points, or 0.48 percent, to settle at 3,583.09.

Philstocks Financial Inc. research head said Japhet Tantiangco said investors continued to take profits amid lack of fresh positive catalysts.

“The local bourse also took cues from Wall Street’s overnight decline wherein investors took a cautious stance while waiting for US economic data, including the January personal consumption expenditure price index,” Tantiangco said.

Despite the market’s decline, foreign investors were net buyers by P77.08 million, and the market value turnover improved to P5.21 billion.

Meanwhile, Asian markets were mostly muted Tuesday after record-setting gains last week, with traders eyeing the release of US economic data this week that could offer a better sense of when the Federal Reserve may start cutting rates.

Last week’s rallies—including an all-time record close for Tokyo’s benchmark index—were fueled by solid earnings from US chip titan Nvidia, a bellwether for artificial intelligence.

But US markets fell on Monday, and Asian equities started this week with a “more cautious demeanor”, Stephen Innes, managing partner of SPI Asset Management, said in a note.

“This subdued tone suggests a moderation in investor sentiment following the recent tech-driven buying spree,” he said.

Investors were looking ahead to the Federal Reserve’s preferred measure of inflation, the US Personal Consumption Expenditure (PCE) price index due Thursday, as well as comments from several Fed officials on Wednesday and Friday, which Innes said could supply insights into the central bank’s rate cut outlook.

Expectations for when the Fed may start lowering rates have gradually shifted to the second half of the year, as inflation data has come in hot and policymakers indicate they need to see more signs that it is moving towards their 2.0 percent target.

“Economic data will return to center stage,” Chris Larkin at E*Trade from Morgan Stanley told Bloomberg.

“After hotter-than-expected (consumer price index) and (producer price index) readings earlier this month, more people may be looking to the PCE for insight into the reinflation threat — and how it may influence the Fed’s timing of rate cuts.”

In Asia, Tokyo inched up Tuesday, helped by a cheaper yen and purchases aided by rallies in US chip-linked shares, but profit-taking capped the upward movement, IwaiCosmo Securities said.

Steelmakers and banks were among the winners in Tokyo while chip-tied shares fell after recent gains, IwaiCosmo added.

New government data showed Tuesday that Japanese consumer inflation slowed for the third straight month to 2.0 percent in January.

The better-than-expected reading has stoked speculation that the Bank of Japan might raise interest rates “as early as next month, although April remains the favored timeline”, Innes said.

“The prevailing theory suggests that the BOJ might find it easier to proceed with policy normalization, with inflation surpassing the target.”

Unlike other major central banks that have raised interest rates in an effort to bring down inflation, the BoJ has stuck to its ultra-loose policy, putting pressure on the yen.

Shanghai stocks ended higher on tech gains, while Hong Kong, Mumbai and Sydney were also up.

Seoul, Taipei, Singapore, Jakarta, Bangkok, Manila and Wellington were all down.

London and Frankfurt opened higher while Paris was flat.

Following the PCE figures, investors will turn their focus to Chinese manufacturing numbers due Friday. With AFP


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