Stock markets diverge ahead of key rate decisions

MANILA, Philippines — Wall Street stocks soared while European and Asian markets dropped yesterday as investors braced for interest rate decisions this week from major central banks, including the Federal Reserve.

At the Philippine Stock Exchange, the main composite index tumbled by 2.82 points or 0.04 percent to settle  at 6,582.38.  Likewise, the broader All Shares index was down by 5.34 points or 0.16 percent to end at 3,431.65.

The sectoral gauges were also mostly down led by mining and oil, holding firms and the industrial sectors.

Total value turnover reached P5.421 billion.  Market breadth was negative, 113 to 68 while 43 issues were unchanged.

Analysts expect the Fed and the European Central Bank to announce rate hikes at their meetings this week.

And the Bank of England is on course for a ninth straight increase as policymakers try to bring down inflation from the highest levels in decades.

“Following a softer session in Asia, European markets are on edge, opening the week lower ahead of a critical few days,” said Victoria Scholar, head of investment at Interactive Investor.

“The ECB, the Fed and the Bank of England are expected to raise rates by 50 basis points each as the pace of tightening looks set to slow,” Scholar said.

The half-point jumps will still be steep rises, however, as central banks struggle to cool the pace of price increases, particularly in energy and food.

London, Frankfurt and Paris all closed lower.

Ahead of the Fed’s policy meeting, investors are set to digest US inflation data due Tuesday.

“It will be a fitting hump day on Wednesday, because the (inflation) data and the Fed decision are big humps the market needs to get over if it wants to make a run at a year-end rally,” said market analyst Patrick O’Hare at Briefing.com.

“If either, or both, disappoint in a meaningful way, then a year-end rally becomes a more challenging proposition.”

Traders are also keeping an eye on developments in China as it moves away from a zero-COVID policy that has hammered its economy, the world’s second largest after the United States.

The shift comes after widespread protests following nearly three years of strict controls.