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PH stocks, peso slip on higher-than-expected US inflation

The United States’ higher-than-expected consumer price index (CPI) for August 2022 at 8.3 percent resulted in across-the-board decline in the local bourse on Wednesday, which was mirrored by the peso.


The Philippine Stock Exchange index (PSEi) lost 1.77 percent, or 118.95 points, to 6,582.86 points.


All Shares followed with a drop of 1.29 percent, or 45.62 points, to 3,497.21 points.


Holding Firms registered the biggest decrease at 2.32 percent and was trailed by Financials, 2.25 percent; Industrial, 1.40 percent; Mining and Oil, 1.09 percent; Services, 0.97 percent; and Property, 0.78 percent.


Trade volume remained thin at 821.23 million shares amounting to PHP5.29 billion.


Decliners surpassed advancers at 137 to 41, while 46 shares were unchanged.


Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales, said the local bourse’s main index closed the day in line with its counterparts in the region.


“As for the US, the selling pressure was so strong that the three major index(es) went tumbling to their worst day since June 2020, spurring fears that the Fed (Federal Reserve) could potentially hike even higher than 75 basis points,” he said.


This, after US August 2022 CPI rose by 8.3 percent year-on-year, “despite the substantial drop in crude prices.”


The latest rate of increase in prices in the US decelerated from the previous month’s 8.5 percent but analysts have noted broader price pressures after the month-on-month jump rose by 6.3 percent from 5.9 percent both in June and July.


Limlingan said the US’ producer price index (PPI) will be released on Wednesday (US time) “and could offer further clues into the state of inflation before the Fed’s rate hike meeting next week.”


On the other hand, Brent crude oil futures for November 2022 declined by 0.88 percent to USD93.17 per barrel and the West Texas Intermediate (WTI) by 0.5 percent to USD 87.31 per barrel.


Similarly, gold prices fell over 1 percent “as the dollar jumped after an unexpected rise in inflation cemented bets for aggressive rate hikes from the US Federal Reserve,” Limlingan added.


Meanwhile, the peso depreciated to 57.11 to a US dollar from 56.77 a day ago.


It opened the day at 57.1, a slip from the previous session’s 56.8 start.


It traded between 57.27 and 57.00, resulting in an average of 57.16.


Volume reached USD989.9 million, higher than the USD934.45 million on Tuesday.


Source: Philippines News Agency