Stocks drop ahead of March US inflation report

 Stocks drop ahead of March US inflation report

SHARES declined on Monday amid a shortened trading week and ahead of the release of US inflation data, which are expected to have reached a fresh high in March.

The benchmark Philippine Stock Exchange index (PSEi) fell by 29.73 points or 0.42% to close at 6,988.29 on Monday, while the broader all shares gave up 11.24 points or 0.30% to end at 3,728.21.

“Share prices opened the week in a negative tone. Market participants traded with caution ahead of a long Lenten holiday break as apprehensions over the US inflation continue to spook investors,” Papa Securities Corp. Equities Strategist Manny P. Cruz said in a text message.

“Monday’s sideways trading ended in a last-minute sell-off which brought the local market down. The decline and the lethargic trading are attributed to worries over the Philippines’ inflation, the Federal Reserve’s hawkish policy outlook, and the Russia-Ukraine war and its global economic implications,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Philippine shares were quietly sold down as the market lacked major catalysts during the shortened trading week. Sentiment also didn’t get much of a boost as US equities notched losses for the week but ended mixed on Friday as investors braced for tighter monetary policy from the Fed,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.

Markets have raced to price in the risk of ever-larger rate hikes from the Federal Reserve with futures implying rises of 50 basis points (bps) at both the May and June meetings, Reuters reported.

The Fed in March raised its benchmark rate by 25 bps for the first time since 2018 to fight inflation, which hit a 40-year high in February.

The March US consumer price report will be released on Tuesday and the median forecast is for a stratospheric rise of 1.2%, taking annual inflation to an eye-watering 8.5%.

Asian shares slipped on Monday ahead of a week packed with central bank meetings and US inflation data.

At home, all sectoral indices ended in the red on Monday. Property declined by 24.17 points or 0.74% to 3,243.84; mining and oil lost 80.32 points or 0.64% to 12,349.86; industrials dropped by 45.34 points or 0.46% to 9,621.75; holding firms fell by 25.42 points or 0.38% to 6,543.22; financials gave up 1.87 points or 0.11% to 1,667.81; and services went down by 1.46 points or 0.07% to 1,930.86.

Meanwhile, the MidCap index advanced by 0.04 point or 0.52% to close at 1,191.22 and the Dividend Yield index retreated by 4.60 points or 0.27% to 1,692.61.

Value turnover decreased to P3.36 billion with 882.34 million shares changing hands from the P4.02 billion with 659.97 million issues seen on Friday.

Decliners outnumbered advancers, 102 versus 75, while 55 names were unchanged.

Net foreign selling of P208.85 million was seen on Monday versus the P458.19 million in net buying seen the previous trading day. — L.M.J.C. Jocson with Reuters