PSEi drops below 6,500 on red-hot US inflation

MANILA, Philippines — With no fresh catalysts on the local front, Philippine stocks joined other Asian emerging markets rattled by a scorching US inflation report, bringing the main index down to its lowest in a month.

The benchmark Philippine Stock Exchange index (PSEi) fell below the 6,500 level yesterday, losing 63.03 points or 0.97 percent to close at 6,467.01. Likewise, the broader All Shares index shed 37 points or 1.05 percent to finish at 3,474.93.

All counters ended in the red, with mining and oil, services and holding firms among the biggest decliners.

Total value turnover was thin at P5.375 billion. Market breadth was overwhelmingly negative, 146 to 43, while 39 issues were unchanged.

Joseph Roxas, president of Eagle Equities Inc., said the stock market might spiral down further and may re-test last month’s low at 6,380.

“The fall in overseas markets is like COVID-19. It’s contagious,” he said.

First Metro Investment Corp. head of research Cristina Ulang said the market was spooked by the US inflation data shocker of 8.6 percent in May “which may mean higher and rapid US interest rate hikes adversely impacting emerging markets.”

AB Capital Securities also put the spotlight on the US inflation as it could trigger fears of further tightening in the US markets.

The US Federal Reserve already signaled plans for more hikes this week and next month but with inflation skyrocketing, the US central bank may implement even more aggressive cuts.

Around Asia, stocks were likewise hit by unexpectedly hot US inflation and fears of an economic slowdown in China.

Efforts to curtail inflation will remain in focus this week, with the Fed and the Bank of England expected to raise rates, while other central banks in emerging Asia have turned more hawkish in recent months.  Additionally, investors were also concerned about a resumption of COVID-19 lockdowns in China.

“More volatility is expected in the (global) markets in the coming week, with stocks likely to face selling pressure and bond yields possibly inching higher,” OCBC analysts said in a note.