Share prices are expected to return to consolidation mode this week with a downward bias following the hawkish statement of US Federal Reserve chairman Jerome Powell over the weekend.
Powell said in his speech higher interest rates would likely persist “for some time” to tame rising inflation rate.
The US Fed’s next policy meeting is scheduled in September.
Given Powell’s statement, analysts said local investors would be keeping tabs on the August inflation rate that could push up local interest rates further.
The Bangko Sentral ng Pilipinas raised its policy rate by 50 bps [basis points] to 3.75 percent on Aug. 18, bringing the total increase this year to 175 basis points.
“As the benchmark index at an ‘identity test’ towards 7,000, brace for bouts with selling pressure from hands looking to make a quick buck of the market’s mood and momentum,” online brokerage firm 2TradeAsia.com said.
“Accumulate on weakness—the value of game is won before, not after the market price converges with value,” it added.
The benchmark Philippine Stock Exchange Index last week declined 1.6 percent to 6,752.50 as investors succumbed to profit taking. The broader All Shares Index also dropped 1.6 percent to end the week at 3,577.45.
Except for financial index, which rose 1 percent, all other sub-indices ended lower last week. The mining and oil index fell 4.1 percent; holding firms lost 2.6 percent; services dipped 1.9 percent; property slipped 1.90 percent; and industrial went down 1.3 percent.
Foreign investors were net sellers during the week by P925 million, while the average daily value traded fell to P5.8 billion from the previous week’s average of P8.26 billion.
Weekly top price gainers were mostly second and third liners, including PH Resorts Group Holdings Inc., which jumped 28.2 percent to P1.09; Cemex Holdings Philippines Inc., which advanced 11.4 percent to P0.78; and EEI Corp., which climbed 10.7 percent to P3.73.
Weekly top price losers were led by Nickel Asia Corp., which declined 7.6 percent to P5.80; ACEN Corp., which fell 7.4 percent to P8.04; and Philex Mining Co., which dropped 6.8 percent to P3.30.
Meanwhile, Wall Street slumped on Friday after Federal Reserve boss Jerome Powell pledged to act “forcefully” against soaring inflation in a battle that will be painful for American families and businesses.
Wall Street stocks tumbled, with all three main indices ending with losses of three percent or more.
Keith Buchanan at Globalt Investments said, “This wasn’t a shocking speech by any stretch of imagination.”
The Fed has been on an aggressive campaign to raise interest rates—and Powell made it clear at the Jackson Hole gathering of global monetary policymakers that the fight against inflation is not over.
“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance,” he told the gathering, held against the backdrop of the majestic Grand Teton mountains. With AFP