PSEi slips ahead of US consumer inflation report

STOCKS closed lower on Tuesday in thin trade ahead of the release of latest US consumer inflation data overnight that could affect the US Federal Reserve’s policy decision next week.

The benchmark Philippine Stock Exchange index (PSEi) inched down by 13.94 points or 0.2% to close at 6,701.81 on Tuesday, while the broader all shares index dropped by 2.99 points or 0.08% to 3,542.83.

“Local stocks were down on thin trading volume as investors opted to stay on the sidelines,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber Message.

“Market participants are waiting for the key US inflation report, which will come out later tonight,” Mr. Vistan said on Tuesday.

He said markets are expecting an annual rate of 8.1%.

“Any number higher or lower than that will have a bearing on the US FOMC’s (Federal Open Market Committee) decision on US benchmark rates. A huge deviation is likely to rattle the market and cause more volatility,” Mr. Vistan added.

“Philippine shares settled slightly lower ahead of the important US CPI (consumer price index) data, which will be out ahead of the Fed’s September meeting,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The street view is for the cost of goods to drop to 8% from 8.5% the previous month as there is widespread belief that this has already peaked,” Mr. Limlingan added.

Fed Chair Jerome H. Powell last week said the US central bank is “strongly committed” to fighting inflation and needs to continue acting strongly to bring prices down.

The US central bank will meet to review policy on Sept. 20-21, where markets expect another aggressive hike. It has raised rates by 225 basis points (bps) so far since March, including back-to-back 75-bp hikes in June and July.

The majority of sectoral indices ended lower on Tuesday except for financials, which went up by 7.71 points or 0.47% to close at 1,640.38, and holding firms, which climbed by 3.12 points or 0.04% to 6,498.29.

Meanwhile, property declined by 20.84 points or 0.69% to 2,961.76; industrials lost 66.62 points or 0.67% to end at 9,797.17; mining and oil decreased by 36.03 points or 0.31% to 11,581.41; and services slipped by 4.16 points or 0.24% to 1,704.04.

Decliners outnumbered advancers, 107 against 71, while 44 names closed unchanged.

Value turnover went up to P5.52 billion on Tuesday with 706.04 million shares changing hands from P4.31 billion with 636.9 million issues seen the previous trading day.

Net foreign buying climbed to P437.66 million on Tuesday from P407.78 million on Monday.

Regina Capital’s Mr. Limlingan placed the PSEi’s support at 6,550 and resistance at 6,870, while AB Capital Securities’ Mr. Vistan put support at 6,550 and resistance at 6,800. — Justine Irish D. Tabile