PSEi ends week lower as US debt talks hang

MANILA, Philippines — Local share prices continue to slide as concerns over the US debt ceiling talks linger, but other equity markets in Asia turned more optimistic as investors hoped for an 11th-hour deal to avoid a US debt default.

The benchmark Philippine Stock Exchange index (PSEi) closed at 6,530.20, down by 30.02 points or 0.45 percent, while the broader All Shares index slipped to 3,488.08, down by 8.71 points or 0.24 percent.

Total value turnover reached P4.55 billion. Market breadth was negative, 98 to 79, while 37 issues were unchanged.

Luis Limlingan of Regina Capital said local shares ended in the red as Wall Street ponders over the debt ceiling negotiations, and also as the MSCI rebalancing closes in.

US President Joe Biden and top congressional Republican Kevin McCarthy are closing in on a deal to raise the government’s $31.4 trillion debt ceiling for two years, an official told Reuters, but time is running short.

The US Treasury estimates it’ll run out of funds within a week and legislating any deal will take that down to the wire, and even then is unlikely to instantly solve market jitters.

“If you can resolve this, you’re now authorizing the US Treasury to issue bonds and bills ... that’s going to draw out a lot of liquidity from banks,” said Damien Boey, chief equity strategist at Sydney-based investment bank Barrenjoey.

Asia’s stock markets were cautiously higher, with Japan leading gains as data on Friday showed inflation slowing to 3.3 percent in May, a decent proxy for the nation, which means it’s been comfortably above the Bank of Japan’s two percent target for a year now. The world’s third largest economy has struggled for decades to get meaningful and sustained rises in prices, profits and wages.

“The pandemic has brought with it an unprecedented string of inflation drivers for Japan,” said analysts at Nomura, who noted households are spending and have upgraded stock forecast ranges.

“These forces have brought about a tectonic shift in the price-setting behavior of Japanese companies, and thus an improvement in their profit margins.”