THE BENCHMARK stock index dropped on Thursday to move closer to bear territory after Philippine economic growth in 2024 missed the government’s target for a second straight year and with the US Federal Reserve signaling a cautious stance amid inflation risks.
The Philippine Stock Exchange index (PSEi) fell by 0.74% or 45.81 points to end at 6,107.66, while the broader all shares index declined by 0.66% or 24.20 points to close at 3,599.32.
This was the PSEi’s lowest close in nearly 15 months or since it ended at 6,078.03 on Nov. 6, 2023. It is now down by 19.68% from its latest high of 7,604.61 recorded on Oct. 7, 2024, putting it closer to bear territory, which is at least a 20% decline from the benchmark’s most recent peak.
“The local market extended its drop to its fourth straight day as the Philippines’ 2024 economic growth disappointed investors,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
Philippine gross domestic product (GDP) expanded by 5.6% in 2024, below the government’s 6-6.5% growth target. This was also a tad slower than the 5.7% median estimate yielded in a BusinessWorld poll of 18 economists and analysts but was slightly faster than the 5.5% growth in 2023.
“Philippines shares tumbled after the Federal Reserve kept interest rates unchanged in its first policy decision of the year. The Fed maintained the federal funds rate at 4.25% to 4.50%, with its post-meeting statement signaling a cautious stance on persistent inflation,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
The US central bank held interest rates steady on Wednesday and Federal Reserve Chair Jerome H. Powell said there would be no rush to cut them again until inflation and jobs data made it appropriate, Reuters reported.
After the Fed lowered rates three times in the latter part of last year, inflation has largely moved sideways in recent months, but “remains elevated,” the central bank’s policy-setting Federal Open Market Committee said in a statement.
Fed officials say they largely believe the progress in lowering inflation will resume this year, but have now put rates on hold as they await data to confirm it.
Back home, majority of sectoral indices ended in the red on Thursday. Mining and oil declined by 3.12% or 238.04 points to 7,376.44; holding firms retreated by 2.11% or 110.11 points to 5,095.29; financials went down by 1.05% or 22.99 points to 2,150.46; and industrials sank by 0.79% or 69.19 points to 8,621.41.
Meanwhile, property climbed by 0.67% or 15.25 points to 2,289.51 and services went up by 0.48% or 9.57 points to 1,964.95.
Value turnover dropped to P4.95 billion on Thursday with 1.11 billion shares traded from the P5.64 billion with 1.53 billion issues exchanged on Tuesday.
Decliners beat advancers, 118 versus 76, while 36 names were unchanged.
Net foreign selling stood at P398.32 million on Thursday, a reversal of the P199.32 million in net buying recorded on Tuesday. — R.M.D. Ochave with Reuters
