Stocks down as BSP signals rate increase

MANILA, Philippines — Share prices pulled back yesterday on late selling as investors stayed on the sidelines ahead of the release of key economic data in the US, traders said.

The benchmark Philippine Stock Exchange index slid by 10.11 points or 0.16 percent to close at 6,253.96, while the broader All Shares index finished lower at 3,384.45, down slightly by 1.82 points or 0.05 percent.

Total value turnover reached P10.7 billion. Market breadth was positive, 100 to 93, while 46 issues were unchanged.

Luis Limlingan of Regina Capital said local shares edged lower ahead of the US inflation report, coupled with the Bangko Sentral ng Pilipinas (BSP)  statement not ruling out a potential quarter-point hike in November.

“Market traded cautiously as the BSP signaled a potential 25-bps rate hike in November,” First Metro Securities said in a commentary.

Meanwhile around Asia, most markets build on a global rally as hopes grow for a US Federal Reserve pause.

There has been growing belief the Fed is finished with its interest rate hiking cycle, while optimism was also boosted by a report that China is considering a large burst of economic stimulus.

While uncertainty caused by the Israel-Hamas crisis is keeping nerves on edge, the mood on trading floors has improved after a healthy US jobs report last week and dovish comments from a number of top US monetary policymakers.

On Wednesday, Atlanta Fed boss Raphael Bostic said rates were already tight enough to bring inflation back down to officials’ two percent target, echoing some of his counterparts, who see a spike in Treasury yields as tempering the need to lift borrowing costs further.

The remarks were welcomed by many traders who feared that a series of hit readings on the US economy in recent weeks was putting pressure on the bank to announce one more increase before the end of the year.

Eyes will now turn to the release of US inflation figures due later Wednesday and minutes from the Fed’s September policy meeting.

All three markets on Wall Street posted another day of gains thanks to the more risk-on environment, while the so-called fear gauge hit a two-week low.

“A steady stream of dovish messaging from the Fed is just what the rally doctor ordered,” said Stephen Innes at SPI Asset Management.