MANILA, Philippines - Local stocks fell yesterday, snapping a four-day climb, after international rating agency Standard & Poor’s lowered its US credit outlook to negative, prompting a global flight to other assets.
The benchmark Philippine Stock Exchange index (PSEi) shed 23.98 points or 0.56 percent to 4,245.21 yesterday, reversing the gains made on Monday when the index reached a five-month high.
The broader All Shares index fell 5.15 points or 0.17 percent to 3,089.35. Declining issues outnumbered gainers, 74 to 50, while 49 stocks were unchanged.
“A downgrade in the US credit outlook dragged its markets lower as the growing budget deficit worried investors. Since first quarter earnings are not out in the market yet, there are no other leads for the index to follow except for foreign matters and specific corporate developments,” said Ma. Arlysa Narciso of AB Capital Securities.
Reality finally struck the US markets as S&P downgraded its credit outlook from stable to negative. Although it affirmed its triple A rating, its long term debt rating suffered as the economy’s budget deficit continued to swell.
S&P, which assigns ratings to guide investors on the risks involved in buying debt instruments, slapped a negative outlook on the US’ top-notch credit rating, sending Wall St. on its steepest slide in a month.
“The (Lenten) holiday season likewise added stress on both foreign and local markets as most investors were on vacation. This shortened trading period may translate to weaker activity and less firm market performance,” Narciso added.
She said the market’s direction today will hinge on what happens next in the US while investors will continue to keep an eye out for specific corporate factors.
“In case matters remain sour in foreign markets for the rest of the week, the PSEi will only be able to react or adjust next week. The shortened trading period and the Holy Week season is expected to also cause the index to move within a narrow trading range,” the AB Capital Securities analyst noted. – With AP