Index continues to drop on concerns over US rate hike

Share prices closed lower for a third consecutive session yesterday, losing 1.03 percent with investors unloading stocks on concerns over possible further increases in US interest rates and volatile commodity prices, dealers said.

The composite index finished down 23.25 points at 2,229.33. It traded between 2,225.31 and 2,242.17.

The broader all-shares index fell 9.93 points to 1,400.05.

Losers swamped gainers 71 to 26, and 41 stocks were unchanged.

Volume reached 3.82 billion shares worth P1.72 billion.

"What we’re seeing is risk aversion and it’s a regional thing," said Jonathan Ravales of Banco de Oro Universal Bank.

Fund managers have been re-aligning their portfolios by trimming investments in regional equities and spending more on fixed-income instruments, dealers said.

Concerns that the US Federal Reserve would lift interest rates further have also weighed on the peso, which is trading at four-month lows against the dollar.

Analysts say the Bangko Sentral ng Pilipinas (BSP) may eventually raise rates after keeping them steady for seven months but are not sure whether the increase will happen at its next policy meeting on June 1. The Fed holds its next policy meeting on June 28-29.

Top-traded Ayala Land fell 50 centavos to P12. Bank of the Philippine Islands also fell by a peso to P60.50. Philippine Long Distance Telephone shed P5 to P1,950. Globe Telecom advanced P10 to P895. Equitable PCI Bank jumped P5 to P65.

International Container Terminal Services gained 25 centavos to P13.25 after the port operator said it is proposing to shipping lines that its Naha international container terminal on the Japanese island of Okinawa serve as the hub of a new shipping route between China and southern Japan.

A shares of San Miguel rose 50 centavos to P63.50 while B shares fell P2 to P76.

Gold futures for June delivery yesterday fell $36.20, or 5.4 percent, to $637.50 on the Comex division of the New York Mercantile Exchange, as price swings drove some investors out of the market. That was the biggest one-day fall since August 1993. Last week, the price of the metal slid 7.6 percent, the largest weekly drop since 1990.

"Fund managers are slowing down" their investment in gold and other commodities, said Harry Liu, president of Summit Securities Inc. in Manila. "Gold has gone up $300 so there’s a lot of clearing out. Prices are getting practical.’’

In Asian trading today, gold rose one percent to $644.10 an ounce at 12:35 p.m. Manila time. It has gained 54 percent in the past year. – AFP