Stocks drop on profit-taking before Fed review

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STOCKS declined on Monday on profit-taking and cautious trading before the US Federal Reserve’s policy meeting and the State of the Nation Address of President Ferdinand R. Marcos, Jr.

The Philippine Stock Exchange index (PSEi) fell by 16.31 points or 0.24% to 6,631.25 on Monday, while the broader all-shares index went down by 4.19 points or 0.11% to 3,526.71.

“Last-minute profit taking pushed the market down to 6,631.25… after the three consecutive days of market gain,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“Investors were also waiting for the President’s State of the Nation Address later, which would be crucial in shaping investors’ sentiment,” Ms. Alviar said ahead of Mr. Marcos’ speech on Monday afternoon.

Trading was cautious as investors remained in wait-and-see mode ahead of the US central bank’s monetary policy meeting and the release of more second-quarter corporate results, AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

“Technically, the PSEi is stuck within a narrow range of between 6,500 to 6,700,” Mr. Vistan added.

The Federal Open Market Committee will hold its policy review on July 25-26, where it is expected to raise rates by 25 basis points (bps).

The US central bank paused its tightening cycle in June after hiking its key rate by 500 bps since March last year to a range between 5% and 5.25%.

All sectoral indices went down on Monday except for mining and oil, which rose by 69.97 points or 0.69% to 10,182.90, and financials, which went up by 3.32 points or 0.17% to 1,951.68.

Meanwhile, holding firms declined by 36.01 points or 0.55% to 6,406.83; services fell by 8.73 points or 0.54% to 1,586.03; industrials decreased by 12.82 points or 0.13% to 9,298.21; and property slipped by 1.58 points or 0.05% to end at 2,706.51.

Value turnover declined to P3.11 billion on Monday with 659.64 million shares changing hands from the P8.75 billion with 776.01 million issues seen on Friday.

Decliners outnumbered advancers, 114 versus 73, while 41 names closed unchanged.

Net foreign buying fell to P128.4 million on Monday from the P374.67 million seen on Friday.

Meanwhile, Asian shares on Monday braced for an action-packed week of earnings and central bank meetings that will likely see higher interest rates in Europe and the United States, and just possibly the end of the monetary tightening cycle in both, Reuters reported.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.3%.

Markets are fully priced for quarter-point hikes from the US Federal Reserve and European Central Bank (ECB), so the focus will be on what Fed Chair Jerome Powell and ECB President Christine Lagarde say about the future.

The odd man out will be the Bank of Japan which meets on Friday and is thought likely to keep its super-loose policy intact.