Worries pull pesos, stocks

The peso and the stock market tumbled on Monday as worries about continued monetary tightening intensified.

The currency weakened by 64 cents and fell again to the P55:S1 level, closing at P55.51 against the dollar.

“The peso weakened after the local stock market indicator, the Philippine Stock Exchange Composite Index (PSEi), fell for the third day in a row… [to] new lows in almost two months or since January. January 3, 2023,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

The benchmark PSEi fell below the 6600 level, shedding 86.56 points, or 1.29 percent, to close at 6599.34. The broader All Shares also shed 39.95 points, or 1.12 percent, to end the day at 3532.25.

“U.S. stocks fell sharply last Friday amid continued hawkish stance by the Federal Reserve amid … strong economic data,” said Claire Alviar, a researcher at Philstocks Financial Inc.

“At home, our BSP (Bangko Sentral ng Pilipinas) governor is still seeing another rate hike of at least 25 basis points. In Asia, most stocks were also in the red after the worst week of 2023 on Wall Street.” she added.

Ricafort pointed to rising U.S. personal consumption spending data, “the Fed’s preferred inflation indicator,” and added that “the latest hawkish signals from Fed officials haven’t helped either, as stronger U.S. economic data could mean further rate hikes.” The Fed may be coming.”

Regina Capital Development Corp. Managing director Louis Limlingan said local earnings reports and upcoming data announcements will determine the direction of the market through the end of the week.

These include the state budget balance for December and the latest Purchasing Managers’ Indices (PMI) and Producer Price Indices.

“In the US, Wall Street’s attention will be on key environmental data releases this week,” including PMI and jobless claims. “There will also be several speeches by members of the Fed during the week.”

The peso opened at 55.25 pesos: $1 and fluctuated between 55 and 55.64 pesos. Volume reached $1.332 trillion, up from $1.109 trillion in the previous session.

On the stock market, all sectoral indices declined, except for financial ones (+0.28%). Services fell the most, at 3.46 percent.

A total of 893.23 million shares were sold, worth 7.50 billion pesos.

The downs outperformed the ups, from 149 to 55, while 34 were flat.