Local stocks extended their losses Tuesday, as the April inflation rate came in a little higher than the previous month’s level.
The benchmark Philippine Stock Exchange index (PSEi) dropped 31.91 points, or 0.51 percent, to close at 6,618.58, while the broader all-shares index lost 10.76 points, or 0.31 percent, to settle at 3,505.75.
Regina Capital Development Corp. head of sales Luis Limlingan said the index tumbled as April inflation rate inched up to 3.8 percent from 3.7 percent in March, driven by higher prices for food and non-alcoholic beverages.
Philstocks Financial Inc. research analyst Mikhail Plopenio said investors exercised caution amid the continuous climb in inflation rate, which is now nearing the upper end of the government’s target range of 2 percent to 4 percent.
“Investors also traded cautiously while waiting for the Philippines Q1 GDP [gross domestic product] data set to be released later this week,” Plopenio said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the market dropped after Israel rejected a ceasefire proposal that was backed by Hamas.
Value turnover reached P5.72 billion. Foreign investors were net sellers by P890.7 million.
Meanwhile, most Asian markets built on the latest global rally Tuesday as optimism that the US Federal Reserve will cut interest rates this year continued to breeze through trading floors.
Friday’s big miss on jobs creation for April, a strong earnings season and soothing comments about the policy outlook by central bank chief Jerome Powell have combined to push equities higher in recent weeks.
Positive soundings out of Beijing on help for the world’s number two economy and very low valuations after years of selling are also injecting some much-needed life into Hong Kong and mainland Chinese markets.
Investors will be keeping an eye on comments from Fed officials this week in light of the recent jobs data, which came after three months of forecast-beating inflation figures that had seen markets lower their rate cut expectations to less than two — from six at the start of the year.
The upbeat mood was ushered in by Powell’s remarks last Wednesday that he did not foresee borrowing costs going up again this year and that he still expected to cut at some point.
That tempered a lot of the volatility in markets caused by wild fluctuations in the yen at the start of last week that reportedly prompted two Japanese interventions.
“Bulls will be looking to maintain their momentum after snatching last week from the jaws of bears,” said Chris Larkin at E*Trade from Morgan Stanley.
“This week is light on high-profile economic data, but heavy on Fed members hitting the speaking circuit. Traders will be dissecting any comments they make about potential rate cuts.”
Richmond Fed chief Thomas Barkin said this week: “I am optimistic that today’s restrictive level of rates can take the edge off demand in order to bring inflation back to our target.
“The full impact of higher rates is yet to come,” he said in prepared notes, according to Bloomberg News.
On Wall Street the S&P 500 and Nasdaq chalked up more than one percent in gains while the Dow was also in the green.
Asia came largely in line, though some markets fell away as the day wore on.
Tokyo advanced as it reopened after a long weekend break, while Shanghai, Sydney, Seoul, Taipei and Bangkok were also up.
London, Paris and Frankfurt were also on the front foot.
But Hong Kong lost momentum after ten successive gains, while Singapore, Wellington, Manila, Mumbai and Jakarta also struggled. With AFP