Local shares opened the week in the red ahead of the US Federal Open Market Committee (FOMC) meeting slated in the middle of the week.
The 30-company Philippine Stock Exchange index shed 76.78 points, or 1.14 percent, to close at 6,649.23 Monday, while the broader all-shares index dropped 24.77 points, or 0.68 percent, to settle at 3,605.33.
Analysts said investors would closely watch the FOMC meeting as this would provide clues on the path of US interest rates.
“Funds are also gearing up for another economic heavy week with more company earnings coming in as well,” Regina Capital Development Corp. head of sales Luis Limlingan said.
“This week’s key economic data releases include several important indicators for the US and the Philippines,” he said.
Except for industrial which rose 0.16 percent, all sectoral indices ended in the red. Financial declined by 2.65 percent, even after banks reported strong first-half financial performance.
Mining and oil dropped 1.18 percent, followed by property, services and holding firms, which decreased by 0.90 percent,0.84 percent and 0.51 percent, respectively.
Value turnover reached P4.67 billion.
Meanwhile, Asian markets rallied Monday, tracking a surge on Wall Street after data showing US inflation slowed further in June stoked hopes the Federal Reserve will cut interest rates.
The upbeat mood comes at the start of a busy week for traders, with the central banks of the United States and Japan making policy decisions, a key US jobs report due on Friday and megacaps releasing their earnings.
The gains helped claw back some of the hefty losses suffered last week after disappointing results from tech titans Tesla and Alphabet caused panic-selling among investors who had piled into the sector this year.
All three main indexes in New York jumped more than one percent Friday after the Fed’s preferred gauge of inflation, the personal consumption expenditures (PCE) index, slowed to 2.5 percent last month.
The reading, which was just above officials’ two percent target, was the latest to boost bets on a rate cut in September and pushed up expectations for two more before January.
Fed chief Jerome Powell sparked a rally in markets this month when he said decision-makers did not need to see the reading hit two percent before moving.
The bank is due to make an announcement Wednesday, ahead of the release of the closely watched non-farm payrolls report Friday.
“Incoming data ahead of the July (Fed policy) meeting could not have been better: consumption rebounded in June after a weak start into the second quarter,” said Christian Scherrmann at DWS.
“Lower-than-expected gains in inflation for the same month pleased both consumers and central bankers. Meanwhile, it appears that labour markets remain on track towards a better balance.”
However, analyst Stephen Innes said there were still risks ahead.
“It’s a week to buckle up. A significant downside miss on the NFP could spell ‘bad news is bad news’ for stocks,” he said in his Dark Side Of The Boom newsletter.
“While an upside beat might reduce the chances of one of those Fed rate cuts baked into the 2024 cake. This could strengthen the US dollar and spoil everyone’s rate-cut party.”
Asian investors were in a buoyant mood at the beginning of the week.
Tokyo piled on more than two percent after eight days of losses, while Hong Kong gained more than one percent.
Sydney, Seoul, Singapore, Taipei and Mumbai were also up, while Shanghai was flat.
London and Frankfurt rose but Paris edged down.
Manila and Wellington also dipped.
The Bank of Japan is also lined up to make an announcement Wednesday amid speculation it will hike rates again, having done so in March for the first time in 17 years as it shifts away from its ultra-loose policy.
Expectations for a rise, either this week or at the BoJ’s next meeting, along with bets on a Fed cut, have helped push the yen higher against the dollar after it hit a four-decade low near 162 per dollar at the start of the month.
Still, analysts at Moody’s Analytics said: “We expect the Bank of Japan to leave interest rates on hold.
“The spotlight will be on the reduction in government bond purchases announced in June. With inflation cooling and economic data underperforming, a rate hike now would be premature.
“We’re betting on a rate hike in September; by then, economic indicators should be showing an improvement.” With AFP
