The Philippine Stock Exchange index (PSEi) ended a three-day rally on Tuesday, closing 1.20% lower at 6,545.38 points, as investors reacted to December’s inflation data. The broader All Shares index also declined by 1.14% to settle at 3,750.69 points.
According to Japhet Tantiangco, research manager at Philstocks Financials, profit-taking drove the decline in local equities. “Investors also digested the December 2024 inflation figure of 2.9%, faster than the previous month’s 2.5%. This figure leans towards the upper end of the Bangko Sentral ng Pilipinas (BSP) forecast range of 2.3% to 3.1%,” he explained.
Most sectoral indices closed in the red, with only the Mining and Oil sector registering a modest gain of 0.30%, finishing at 7,731.41 points.
The Services sector posted the largest losses, dropping by 1.88% to 2,123.19 points.
It was followed by Property, which fell 1.67% to 2,360.00 points; Financials, which dipped 0.80% to 2,208.71 points; Industrial, down 0.62% to 9,255.16 points; and Holding Firms, which declined by 0.50% to 5,620.10 points.
Market breadth favored losers, with 124 declining issues outpacing 96 gainers, while 39 stocks remained unchanged.
Peso shows modest strength
Meanwhile, the Philippine peso strengthened slightly against the US dollar, closing at 58.19 from Monday’s 58.27. The peso opened at 58.15 and traded within a range of 58.02 to 58.19. The average rate for the day was recorded at 58.10.
Trading volume in the foreign exchange market increased, with USD1.87 billion in transactions, compared to USD1.74 billion on Monday.
Inflation and market outlook
The uptick in December’s inflation, attributed to higher prices in food, utilities, and transportation, has raised investor concerns about potential adjustments in the BSP’s monetary policy.
Analysts suggest that market participants may remain cautious in the coming days as they consider inflationary pressures and their impact on economic growth.
Despite the day’s decline, Tantiangco noted that opportunities remain for bargain hunters, especially in sectors with strong fundamentals. However, he emphasized the need for clarity on inflation trends and external economic factors to regain investor confidence.