Index slips 19 pts ahead of expected rate cut

Share prices slid for the second straight session Tuesday, but expectations of an interest rate cut inspired buying that reduced steeper losses.

The Philippine Stock Exchange Index fell 18.88 points, or 0.5 percent, at 3,599.49, after plunging 2.3 percent Monday. The index was down two percent early in Tuesday’s session.

“The sell-off was a bit overdone,” said Regina Capital Development analyst Gomer Tan.

Traders said expectations that the central bank will cut its benchmark interest rates Thursday inspired buying.

“Well, many are expecting, but still, others doubt there will be a cut given inflationary risks brought about by rising oil prices,” Tan said.

A Dow Jones Newswires’ poll of eight economists showed six expected a quarter point rate cut amid still benign inflation and a rapidly rising peso.

Philex Mining Corp. plummeted 10.7 percent at P9.60 after a sharp plunge in gold futures prices overnight.

Conglomerate Ayala Corp. slipped P1.7 at P570 ahead of third-quarter earnings, while its unit Ayala Land Inc. ended unchanged at P16 after reporting a 21-percent on-year rise in its third-quarter profit.

Decliners outnumbered gainers 58 to 41, while 51 stocks were unchanged.

PLDT, the country’s biggest company by market value, rose P45 to P3,005 after hitting a six-week low of P2,925 in early trade.

“There’s nothing fundamentally wrong with our economy so any downturn should be viewed as a fresh opportunity to get back into the market,” said Rommel Macapagal of Westlink Global Equities.

But a convincing recovery would depend largely on Wall Street’s performance, he said.

On Tuesday, the Dow Jones industrial average ended below 13,000 for the first time since August.

“We’re still prone to big and sudden drops at this point. But sentiment may improve if the Dow rises back above 13,000,” Macapagal said.

Oil prices may be taking a breather from their record-setting run but the respite has not helped ease concerns about the health of the US economy.

“Oil prices retreated but investors are likely to continue to be cautious, while equally hopeful, for a rate cut this coming Nov. 15,” said Prince Anthony Yeung of AB Capital Securities.

The Philippine central bank is widely expected to deliver its third interest rate cut for this year when it holds its policy meeting on Thursday.

Economists are betting on a rate cut because of the need to slow the peso’s appreciation against the dollar, which they see as the main consideration. — AP, AFP