LOCAL shares snapped out of their rally on Friday mirroring Wall Street’s decline on Thursday amid fears that central banks’ rate hikes could lead to an economic downturn.
The bellwether Philippine Stock Exchange index (PSEi) declined by 35.91 points or 0.54% to close at 6,541.03 on Friday, while the broader all-shares index lost 9.79 points or 0.28% to 3,432.47.
Week on week, the PSEi closed higher by 44.53 points or 0.69% versus its close of 6,496.50 on Dec. 16.
“Philippine shares were sold off ahead of the long weekend as investors worried that overtightening from central banks worldwide could force the economy into a downturn,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message
“The local stock market gauge corrected lower in line with the overnight downward correction or profit taking in the US stock markets after gaining for two straight days,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The PSEi also corrected lower, partly due to the healthy upward correction in the US dollar or peso exchange rate … during the last trading day before the long Christmas holiday weekend and towards the culmination and eventually tail-end of the holiday-related spending that comes along with it,” he added.
On Thursday last week, Wall Street closed lower as investors worried that the US Federal Reserve will keep hiking interest rates for longer than feared, Reuters reported.
The Dow Jones Industrial Average fell by 348.99 points or 1.05% to 33,027.49; the S&P 500 lost 56.05 points or 1.45% to 3,822.39; and the Nasdaq Composite dropped by 233.25 points or 2.18% to 10,476.12.
Back home, the peso closed at P55.15 against the greenback, down by six centavos from Thursday’s P55.09 close, data from the Bankers Association of the Philippines showed.
The peso opened the session at P55.25 per dollar and reached its weakest showing at P55.35 against the dollar.
Mr. Limlingan said Philippine market volumes were depressed because of upcoming long weekends and most fund managers were already going on break.
On Friday, value turnover declined to P3.14 billion with 1.91 billion shares changing hands from P6.47 billion with 3.77 billion issues traded on Thursday.
Net foreign selling climbed to P248.14 million on Friday from P166.84 million seen the previous trading day.
For the week, Mr. Ricafort said net foreign selling narrowed to $24.6 million versus $34.9 million in the previous week.
He placed the PSEi’s next minor support at 6,380 and its resistance at the 6,630-6670 range. — Justine Irish D. Tabile