PSEi drops to 6,352.32 as peso falls

The Philippine Stock Exchange (PSE) closed down 1.44% on Thursday as the index corrected 92.69 points lower to close at 6352.32.

According to Japhet Tantiangco, senior analyst at Philstocks Financial Inc., and Louis Limlingan, managing director of Regina Capital Development Corp., investors have cashed in on profits from the local market leading up to the 4th day of the rally.

The depreciation of the peso to 56.00 and concerns about a possible aggressive tightening of monetary policy by the Central Bank of the Philippines to contain inflation and support the local currency also contributed to negative sentiment.

“PSEi has corrected lower following the recent weakening of the peso exchange rate, as well as softer unemployment and manufacturing data, which may already reflect the impact of higher prices and longer-term costs on interest rates, which could dampen the outlook for an economic recovery,” Michael. This was stated by the chief economist of Rizal Commercial Banking Corp. Ricafort.

In the United States, Limlingan and Ricafort mentioned that Federal Reserve officials have reaffirmed their hard line on inflation, saying another 50 or 75 basis point move would be “probably appropriate” at the July 26-27 meeting.

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Oil prices fell to a 12-week low due to ongoing fears of a global recession. Futures for Brent crude fell 2 percent, settling at $100.69 per barrel. On the other hand, futures for US West Texas Intermediate oil fell 1 percent to $98.53 a barrel.

Trade remained sluggish, with a net turnover of 4.50 billion pesos, below the year-to-date average of 6.57 billion pesos.

Foreigners were net sellers with a net outflow of 662.86 million pesos.

All sectors declined, with industrial enterprises suffering the most losses, shedding 2.31 percent.

The losers outperformed the winners from 103 to 68, while 51 securities remained unchanged.