Stocks drop as investors pocket gains from rally

BW FILE PHOTO

PHILIPPINE STOCKS closed lower on Tuesday, snapping their two-day climb, as investors pocketed their gains from Monday’s surge and with weaker sentiment on Wall Street spilling over to the local market.

The Philippine Stock Exchange index (PSEi) declined by 0.23% or 17.43 points to close at 7,537.25 on Tuesday, while the broader all shares index lost 0.13% or 5.56 points to end at 4,077.41.

“The local market pulled back this Tuesday as investors took profits after a two-day rally,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

The PSEi closed at a near five-year high of 7,554.68 on Monday.

“The negative cues from Wall Street driven by the rise in Treasury yields and the weakening of the local currency also weighed on the bourse,” Mr. Tantiangco added.

“Philippine shares slipped as investors faced headwinds with rising oil prices and elevated Treasury yields dampened market sentiment,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said in a Viber message.

Wall Street’s three major indexes closed down around 1% on Monday while Treasury yields rose, as traders tamped down bets for US Federal Reserve interest rate easing and worried about the Middle East conflict’s impact on oil prices, Reuters reported.

After Friday’s stronger-than-expected jobs report, traders pulled back from bets for a 50-basis-point (bp) rate cut in November. They were pricing in an 86% chance of a 25-bp cut and a roughly 14% chance the central bank would not cut rates at all, according to the CME’s FedWatch tool.

The change in rate cut expectations caused US Treasury yields to rally, with the yield on benchmark 10-year notes exceeding 4% for the first time in two months.

Investors also continue to fret about how Israel would respond to Iran’s missile strikes. On Monday, Lebanon’s armed group Hezbollah fired rockets at Israel’s city of Haifa while Israeli forces looked poised to expand ground raids into south Lebanon.

The Dow Jones Industrial Average fell 398.51 points or 0.94% to 41,954.24; the S&P 500 lost 55.13 points or 0.96% to 5,695.94; and the Nasdaq Composite lost 213.95 points or 1.18% to 17,923.90.

Back home, the majority of sectoral indices ended lower on Tuesday. Property declined by 2.48% or 75.10 points to 2,950.60; mining and oil went down by 0.71% or 64.91 points to 8,977.38; industrials retreated by 0.18% or 19.04 points to 10,035.22; and holding firms dropped by 0.17% or 10.87 points to 6,394.91.

On the other hand, services rose by 0.85% or 20.01 points to 2,357.07; and financials went up by 0.72% or 17.15 points to 2,399.92.

Value turnover fell to P7.39 billion on Tuesday with 1.22 billion shares changing hands from the P7.87 billion with 1.36 billion issues traded on Monday.

Advancers beat decliners, 109 versus 97, while 54 names were unchanged.

Net foreign buying declined to P428.08 million on Tuesday from P1.35 billion on Monday. — Revin Mikhael D. Ochave with Reuters

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