The Philippine Stock Exchange index (PSEi) declined on Thursday following the statement from the US Federal Reserve for more interest rates increase in 2017. The local index declined for 73.03 points or 1.05 percent to finish 6,855.31, while the all-shares index lost 40.02 points or 0.95 percent to end 4,161.35.
Here are three fast facts about the PSEi declining following Fed signals for more rate hikes.
1. The local stocks decline along with the global stock market. The US Dow Jones industrial average, S&P 500 and the Nasdaq Composite retreated following the Fed’s statement that it could have three more hikes in 2017.
"The Dow backed away from the so far yet-to-be-met magical 20K level after the [US] central [bank] announced just the second interest rate increase in a decade” Business World reported Luis A. Limlingan, managing director at Regina Capital Development Corp., as saying.
Aside from the US index, Asian markets also declined such as the Hang Seng, Shanghai Shenzhen CSI 300 and S&P/ASX 200, which declined by 1.77 percent, 1.14 percent, and 0.82 percent, respectively.
2. Analysts said that markets may continue their downward trend in the face of the Fed’s hawkish tone on interest hikes next year.
“I think we’re already pricing in a rate hike,” Victor F. Felix, equity analyst at AB Capital Securities, Inc., said.
All six sectoral indices ended in the red on Thursday, with industrial firms leading the decline as it gave up 131.44 points or 1.21 percent to 10,748.72. The other indices also declined as follows:
- Property sank by 71.16 points or 2.29 percent to 3,041.51
- Mining and oil ceded 117.40 points or 0.96 percent to 12,103.01
- Services went down 6.92 points or 0.54 percent to 1,281.89
- Financials lost 7.42 or 0.44 percent to 1,677.57
- Holding firms shed 25.68 points or 0.36 percent to 7,037.96
3. Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said that the market may not dwell too much because the Fed’s plotted dots may still change over time.
“I am hopeful that recent dollar-peso movements have also factored these in and that any further movement during the balance of the year would only be small refinements to bank positions,” The Philippine Daily Inquirer reported Tetangco, as saying. He added that the local central bank will continue to watch over the impacts of the Fed rate hike to global demand, prices of global commodities, as well as domestic inflation and growth dynamics.
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