Stocks rose, but the Philippine peso fell to a new 17-month low of 57.78 against the US dollar Thursday as investors sought the safety of the greenback amid global concerns.
Regional currencies were generally weaker against the US dollar in recent days, with the Japanese yen falling to a three-decade low of 155 per dollar.
Investors were preparing for the release of key US inflation data Friday that could have a bearing on the Federal Reserve’s plans for cutting interest rates ahead of its meeting next week.
The Philippine peso tumbled to 57.78 a dollar from 57.55 on Wednesday, with analysts pointing to the general strength of the greenback on expectation the Fed would delay its interest rate cuts.
The Bangko Sentral ng Pilipinas earlier also said that the peso’s recent decline was due to the strength of the dollar amid expectations that the US Federal Reserve will not be cutting interest rates anytime soon.
Last week, Fed Chairman Jerome Powell said persistently elevated inflation will probably delay any Fed interest rate cuts until later this year.
“If higher inflation does persist,” he said, “we can maintain the current level of [interest rates] for as long as needed.”
A weaker peso is seen as favoring exporters as prices of Philippine-made goods become cheaper and more attractive to international buyers. Families of overseas Filipinos who rely on dollar remittances are also expected to benefit as they get more pesos per dollar.
Importers however are at a disadvantage as import costs rise, especially for commodities like oil and other fuels.
Meanwhile, the Philippine Stock Exchange index inched up by 2.13 points, or 0.03 percent, to close at 6,574.88, while the broader all-shares index advanced 4.51 points, or 0.13 percent, to reach 3,467.97.
Regina Capital Development Corp. head of sales Luis Limlingan said investors were waiting for more positive cues.
“Philippine share consolidated as investors awaited more leads before testing the 6,600 psychological resistance,” Limlingan said.
“Sentiment was supported overseas as Wall Street logged its second consecutive winning streak as investors applauded the ‘so far, so good’ earnings results of US-listed firms,” he said.
Oil prices also declined as the threat of war in the Middle East faded.
Value turnover remained weak, reaching less than P4 billion, as investors stayed on the sidelines.
Foreign investors were net buyers for the day with total net inflows amounting to P130 million.
Meanwhile, Asian equities were mixed Thursday as investors turned cautious after the past three days’ sizeable gains, with Meta’s warning that it will spend far more than expected this year fueling worries that the latest tech-led rally may have gone too far.
Traders also kept an eye on Japan as the yen wallowed at a fresh three-decade low above 155 per dollar, a level many observers saw as likely to see authorities intervene in currency markets.
They were preparing for the release of key US inflation data Friday that could have a bearing on the Federal Reserve’s plans for cutting interest rates ahead of its meeting next week.
Stocks have enjoyed broad gains this week on optimism that earnings from some of the world’s biggest companies — particularly in the tech sector — would show that profits remained strong even amid stubbornly high inflation and elevated interest rates.
The latest advances saw London chalk up a new record, joining Frankfurt, Paris, Tokyo and Wall Street this year.
However, they lost a little momentum in New York on Wednesday — with the Dow down, S&P flat and Nasdaq slightly higher.
Asia followed suit, with analysts suggesting Facebook parent Meta could be a key reason after it projected second-quarter sales that were below analyst expectations and increased its spending estimates.
Because of investments in artificial intelligence, it saw 2024 capital expenditure of $35-$40 billion, up from a prior range of $30-$37 billion. Its shares tanked more than 10 percent in after-hours US trading.
Tokyo, Singapore, Seoul, Taipei, Mumbai and Jakarta all fell, though Hong Kong resumed its latest rally, while Shanghai, Bangkok and Manila also edged up.
London rose in the morning as miner Anglo American surged around 13 percent after Australian mining giant BHP confirmed a $38.8 billion takeover bid for it, a deal with the potential to fundamentally reshape the sector.
Paris and Frankfurt fell.
“Meta’s resources are vast, but not infinite,” Sophie Lund-Yates, at Hargreaves Lansdown, said.
“The language around spending plans has become bolder once more, and this could be what’s spooking markets.”
Tech titans Microsoft and Alphabet are due to report later in the day.
Then focus turns to the macro-economy, with the release Friday of the personal consumption expenditures (PCE) index — the Fed’s favored gauge of inflation.
There are fears that inflation could spike again after three straight months of above-forecast consumer price index figures that — along with warnings from monetary policymakers — dented expectations for how many cuts the bank will make this year.
The PCE reading comes ahead of the Fed’s meeting next week.
“Since the start of this year, we have held the view that the (policy board) will embark on a series of gradual, 25 basis-point-per-quarter rate cuts, commencing in June” and going through to the third quarter of 2025, said HSBC’s Ryan Wang.
“While we retain this view, the risks are clearly skewed to a later start for rate cuts given (Fed boss Jerome) Powell’s assessment of recent economic activity and core inflation data,” he said.
In Japan, Finance Minister Shunichi Suzuki said he was keeping a close eye on currency markets after the yen fell to a 34-year low of 155.74 to the dollar, fueling speculation of an intervention to support the currency.
Officials have in recent weeks said they are prepared to step in owing to excessive moves they blamed on speculators.
However, commentators warn that an intervention will only be a temporary solution owing to the fact that US interest rates remain at two-decade highs and the Bank of Japan remains wedded to its loose monetary policy.
The bank holds its next meeting Friday. With AFP