Impending interest rate hike drags down index

MANILA, Philippines - Concerns over the impending increase in interest rates and the peso’s weakness dragged the local benchmark index in the negative territory for the second straight day.

The Philippine Stock Exchange index lost 0.70 percent or 45.14 points to 6,417.35, while the broader all shares index shed 0.89 percent or 34.87 points to 3,872.84.

Nisha S. Alicer, research strategist at DA Market Securities, said the slide resulted from the US market’s decline and currency slump in regional markets given the “confirmation of US Federal Reserve ending stimulus by the third quarter and possible rate hike early 2015.”

The overseas developments coincided with the pressure from profit taking in the local bourse, Alicer said.

Wall Street slumped on Wednesday after the US Fed cut anew its monetary stimulus while warning of higher interest rates. US Fed chair Janet Yellen said the central bank might end the bond buying program late this year and start jacking up interest rates a few months after.

The Dow Jones industrial average dropped 0.70 percent or 114.02 points to 16,222.17, while the broader Standard & Poor’s 500 index fell 0.61 percent or 11.48 points to 1,860.77.

Regional markets also retreated, led by Japan’s Nikkei 225 that eased 1.65 percent or 238.29 points to 14,224.23 while markets in Hong Kong, Singapore, Korea, Taiwan and Indonesia all ended in the red.