Shares decline as market awaits Fed, US data

STOCKS dropped on Monday amid a lack of catalysts as investors await the US Federal Reserve’s policy decision and economic data releases.

The benchmark Philippine Stock Exchange index (PSEi) went down by 81.19 points or 1.15% to close at 6,970.97 on Monday, while the broader all shares index lost 37.67 points or 1.01% to end at 3,659.96.

“The market was jittery ahead of Fed key rate hiking and forward guidance, which is expected to remain hawkish,” First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said in a Viber message.

“Philippine shares started the week in the red, with attention specifically on the Fed interest rate decision out this week,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Mr. Limlingan said investors are waiting for more signals from the Fed on its policy direction amid the current inflation environment in the world’s largest economy.

The US central bank is holding its first policy meeting for the year on Jan. 31 to Feb. 1, where markets widely expect a smaller 25-basis-point (bp) hike.

Data on Friday showed that US consumer spending fell in December, while inflation continued to subside, which could give the Fed room to further slow the pace of its rate hikes, Reuters reported.

The US central bank raised its fed funds rate by 50 bps in December to a 4.25%-4.5% range following four straight 75-bp increases, bringing total hikes for 2022 to 425 bps.

Mr. Limlingan added that investors are also waiting for the release of the US Dallas Fed manufacturing index, Institute of Supply Management manufacturing purchasing managers index, JOLTS job openings and US employment data.

“Locally, it will be a relatively quiet week, with the December producer price index set to be released on Tuesday and the January S&P Global manufacturing purchasing managers index on Wednesday,” he said.

Most sectoral indices closed lower on Monday except for financials, which went up by 9.23 points or 0.5% to close at 1,825.92.

Meanwhile, mining and oil dropped by 377.53 points or 3.25% to 11,223.83; property went down by 68.93 points or 2.21% to 3,047.04; industrials declined by 150.98 points or 1.52% to 9,737.85; services lost 23.71 points or 1.34% to close at 1,734.97; and holding firms retreated by 74.74 points or 1.08% to 6,817.61.

Value turnover went up to P8.3 billion on Monday with 1.21 billion shares changing hands from the P5.65 billion with 1.12 billion issues traded on Friday.

Decliners outnumbered advancers, 147 versus 57, while 38 names closed unchanged.

Net foreign buying declined to P135.02 million on Monday from P967.18 million the previous trading day.

FMIC’s Ms. Ulang placed the PSEi’s support at 6,850 and resistance at 7,100. — J.I.D. Tabile