PSEi tumbles amid US interest rate rise worries

MANILA, Philippines — Philippine shares led emerging Asian markets lower yesterday as US Treasury yields perched at two-year highs amid mounting expectations for interest rate hikes left investors worried about fund outflows.

“Market retreated to support following (Tuesday’s) surprise run-up, tracking global markets lower as US Treasury yields rise to a two-year high,” AB Capital Securities said in a commentary.

The benchmark Philippine Stock Exchange index or PSEi shed 82.42 points or 1.12 percent to close at 7,261.54, while the broader All Shares index slipped 27.15 points or 0.70 percent to finish at 3,855.25.

Total value turnover reached P5.295 billion. Market breadth was broadly negative with 103 losers outpacing 75 gainers, while 50 stocks remained unchanged.

Unicapital said investors are also assessing ongoing developments on the COVID cases in the country and are likewise awaiting clarity on the current quarantine restrictions.

Investors are awaiting the Federal Reserve’s Jan. 25 to 26 meeting for hawkish signals as markets now bet on at least four hikes this year, likely starting in March.

With US interest rates slated to rise, Asia’s riskier assets could face outflows, while the region’s central banks may also be forced to follow suit and tighten policy to ensure stability.

The surge in real rates spreads with US real rates suggests central banks in emerging Asian markets have time to maintain their accommodative stances, though “the Fed’s hiking course will erode reals spread very quickly,” Mizuho said in a note.