Local shares extended their losses Friday ahead of the release of the April inflation rate next week.
The Philippine Stock Exchange index dropped 31 points, or 0.46 percent, to close at 6,615.55, while the broader all-shares index dipped 6.41 points, or 0.18 percent, to settle at 3,498.17.
Philstocks Financial Inc. research analyst Claire Alviar said investors maintained a cautious stance on expectations of higher inflation rate for the month of April.
“Also, investors are awaiting the outlook of the Bangko Sentral ng Pilipinas regarding interest rates due to lingering inflationary pressures,” Alviar said.
Regina Capital Development Corp. head of sales Luis Limlingan also cited worries over the higher April inflation rate as the biggest the factor that contributed to the weakness in the market.
Limlingan said share prices went down as investors capitalized on gains amid mounting concerns over higher April inflation rate due to continued increase in food prices.
He said investors were also awaiting economic data overseas, particularly the US jobs data for the month of April.
Sectoral indices ended with mixed results, with property and services registering losses while mining, holding firms, industrials and financials posting gains.
Market value turnover reached P4.6 billion, while foreign investors were net sellers by P1.29 billion.
Meanwhile, Hong Kong led gains across most Asian and European markets Friday thanks to a surge in tech giants, while the yen extended gains against the dollar on revived hopes for US interest rate cuts.
The gains come as traders turn their attention to the release of key US jobs data due later in the day, which could play a major role in the Federal Reserve’s decision-making on when to lower borrowing costs.
A string of data this year showing inflation was holding stubbornly above target, while the economy and labor market remained in rude health, has in recent months seen investors lower their forecast for 2024 rate cuts from six in January to one or two now.
That has dented sentiment on trading floors, though that has been offset by a strong corporate earnings season and healthy company forecasts, helping to push equity markets higher.
Comments from Fed boss Jerome Powell on Wednesday appeared to breathe a little life into the rate-cut narrative when he said that, while he expected borrowing costs to stay high for longer, officials were unlikely to announce another hike.
The bank’s decision to slow the pace at which it shrinks its balance sheet, having bought up vast amounts of bonds previously to keep rates low, also provided some relief.
“While the Fed appears to have all but ruled out a rate hike, it also made clear it’s willing to keep rates higher for longer,” said Chris Larkin, of E*Trade from Morgan Stanley.
“The markets will be hungry for any data suggesting the economy isn’t heating up any more than it did in the first quarter.”
National Australia Bank’s Tapas Strickland added: “The Fed will need an accumulation of evidence that inflation is easing sufficiently before they contemplate cutting rates.”
Wall Street’s three main indexes notched up sizeable gains on Thursday, with the Nasdaq piling on more than one percent as tech outperformed again.
The sector was a key driver in Asia on Friday, helped by a post-market surge in Apple after it released forecast-topping earnings and announced a bumper share buyback.
Hong Kong was the standout thanks to buying of heavyweights including Alibaba and JD.com, with the Hang Seng Index up more than 20 percent from its January low — putting it in a technical bull market.
“Even after the sharp rally, valuations for the China tech stocks are still well below (their) historical average” and compared with their peers, said Vey-Sern Ling at Union Bancaire Privee.
“The strong performance in the past two weeks is probably attracting more fund inflows for fear of missing out.”
Sydney, Singapore, Wellington, Taipei, Bangkok and Jakarta were well in the green, though Seoul, Manila and Mumbai dipped.
London, Frankfurt and Paris all rose in the morning.
Tokyo and Shanghai were closed for holidays.
The yen extended gains, having soared against the greenback soon after the Fed rate meeting on Wednesday, which led to speculation that Japanese authorities had intervened in the forex market for a second time this week.
Estimates indicate officials spent more than $20 billion supporting the unit.
That came after the yen rocketed Monday after it fell to a new 34-year low of 160.17 per dollar, with reports saying more than $30 billion was spent that time.
However, the latest gains have come on the back of budding hopes US rates will be reduced this year. With AFP