Stocks fell Friday to snap a four-day rally on profit-taking, while the peso sustained its advance against the US dollar on speculations central banks could begin slowing their interest rate hike campaign.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, shed 77 points, or 1.2 percent, to close at 6,153.43 as five of the six subsectors ended in the red.
The broader all-share index also lost 25 points, or 0.8 percent, to settle at 3,257.20 on a value turnover of P4.2 billion. Losers outnumbered gainers, 95 to 70, while 58 issues were unchanged.
Four of the 10 most active stocks ended in the green, led by Bank of the Philippine Islands which rose 1.8 percent to P96.00 and PLDT Inc. which gained 1 percent to P1,634.00.
Meanwhile, the peso reached its strongest level in more than a month against the greenback, on the back of the seasonal jump in remittances from overseas Filipino workers in the fourth quarter.
The peso gained P0.25 to close at 57.97 dollar from 58.22 on Thursday. It was its strongest level since settling at 57.48 on Sept. 20, 2022. Total volume reached $912.35 million, down $1.077 billion a day earlier.
Rizal Commercial Banking Corp. chief economist Michael Ricafort told Manila Standard the stronger peso was brought about by the expected seasonal increase in remittances and conversion to pesos that were needed to finance travel and other holiday-related expenses ahead of the long holiday weekend.
“More Filipinos travel [to] their provinces, have reunions or take vacations during the long holiday weekend break, considering the pent-up demand after the restrictions have been finally eased after more than two years of restrictions since the pandemic started in early 2020,” Ricafort said.
Latest BSP data showed that remittances grew 4.3 percent in August to $2.72 billion from $2.61 billion in the same month last year on sustained demand for Filipino workers overseas.
This brought cash remittances in the first eight months to $20.99 billion, up 3.0 percent from $20.38 billion a year ago.
Ricafort also said the US dollar corrected lower against major global currencies to one-month lows on improved global market risk appetite as global stock markets recovered to one-month highs.
“Global crude oil prices are still near nine-month lows recently and other major global commodity prices have already corrected lower in recent weeks/months amid risks of recession in the US,” he said.
Ricafort said recent signals of local policy rate hikes would help stabilize the peso exchange rate and overall inflation.
In Asia, most markets traded lower on signs of weakening economies and disappointing earnings from technology giants. After being battered for most of the year by worries that borrowing costs will continue to rise to fight inflation, traders were cheered by a report last week indicating the US Federal Reserve could take its foot off the gas soon.
That was followed by comments from policymakers hinting as much, while a string of data suggesting the world’s top economy was feeling the impact of higher rates also gave the bank room to maneuver.
A below-expectation increase by the Bank of Canada this week and signs the European Central Bank could take a less hawkish turn helped fuel speculation of a softer outlook for rates, helping push government bond yields down around the world.
Focus is now on the Fed’s next policy decision on Wednesday. With AFP