MIXED. The local equities gauge ended down on Wednesday (May 3, 2023) ahead of the announcement of the Federal Reserve's rate decision after the May 2-3 meeting of its Federal Open Market Committee. On the other hand, the peso sustained its correction against the US dollar. (PNA graphics)
MANILA – Local shares ended Wednesday in the negative territory ahead of the Federal Reserve’s rate decision announcement, but the peso kept its footing against the United States dollar.
The Philippine Stock Exchange index (PSEi) shed 0.99 percent, or 66 points, to 6,606.69 points.
Most of the other counters also slipped during the day, with All Shares down by 0.61 percent, or 21.51 points, to 3,525.18 points.
Financials led the sectoral indices in terms of losses after it fell by 1.69 percent.
Trailing behind were Property, 0.80 percent; Holding Firms, 0.67 percent; Industrial, 0.60 percent; and Services, 0.49 percent.
Only the Mining and Oil index gained among the sectoral gauges after it rose by 0.56 percent.
Volume totaled 567.97 million shares amounting to PHP4.92 billion.
Decliners led advancers at 91 to 86, while 56 shares were unchanged.
“Philippine shares traded in the red on fears of a possible regional banking sector contagion ahead of the Fed’s (Federal Reserve) rate decision,” said Luis Limlingan, Regina Capital Development Corp. head of sales.
The Federal Open Market Committee’s two-day meeting will end later in the day (Philippine time) and it is widely expected to hike anew the Fed’s key rates by 25 basis points to help address fears after the collapse of two US-based banks last March.
Limlingan said “traders questioned the stability of smaller regional financial institutions after the crisis that engulfed Wall Street in March and brought about the end of SVB (Silicon Valley Bank) and First Republic Bank.”
Oil prices in the international market went down “on concerns about the economy as US politicians discuss ways to avoid a debt default and investors prepare for more rate hikes this week.”
Brent crude oil futures dipped 5 percent to USD75.32 per barrel and the West Texas Intermediate (WTI) by 5.3 percent to USD71.66 per barrel.
Meanwhile, the local currency ended the day sideways against the US dollar at 55.335 from its 55.34 finish on Tuesday.
It opened the day at 55.34, an improvement from the previous day’s 55.48 start, and traded between 55.41 and 55.25, resulting in an average of 55.332.
Volume went down to USD1.053 billion from USD1.056 billion in the previous session.
Rizal Commercial Banking Corp. chief economist Michael Ricafort traced the peso’s performance during the day to the third day of correction on account of the decline in global oil prices, which will benefit domestic fuel prices and inflation.
Ricafort said this factor is challenged by the recent increase in local coronavirus disease 2019 (Covid-19) and the news about the El Nino alert, saying the dry spell may hit the country starting June or July and may persist until the first quarter of 2024.
He said the dry spell “could reduce agricultural production and could lead to higher prices/inflation.”
For Thursday, the currency pair is expected to trade between 55.25 and 55.45. (PNA)
