PSEi dives back to 6,400 level as investors await Fed, BSP decision

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Metro Manila (CNN Philippines, September 19) — Local shares plunged to 6,400 territory on Monday after over a month as investors await the rate-setting decisions of the US Federal Reserve and Bangko Sentral ng Pilipinas (BSP) this week.

The Philippine Stock Exchange (PSE) index closed at 6,437.42, down 1.70% from 6,548.77 on Sept. 16. Today marks its fifth straight trading day in decline.

This is also the PSEi’s lowest level since Aug. 10, where it ended trading at 6,471.84 before rebounding to 6,680.68 the day after.

“Philippine shares started softly as this week many investors will be awaiting the outcome of the respective central bank meetings this week,” said Regina Capital managing director Luis Limlingan over Viber, noting that the most awaited news in the region is the US Fed’s decision on Sept. 21.

Market watchers mainly expect the US central bank to hike rates by another three-quarters of a percentage point or 75 basis points. However, some project an unprecedented full percent point or 100-bp increase to dampen inflation. 

READ: American inflation rose more than expected in August

Meanwhile, UnionBank chief economist Carlo Asuncion said the PSEi is responding to events last week, particularly the drop observed in the US S&P 500 index and other global equities markets, also in anticipation of a fresh Fed hike.

“Note that a number of other central banks are poised to decide on rate hikes and the magnitude of these rate increases are fueling a lot of volatility in the market,” Asuncion told CNN Philippines in an email.

He added the BSP is expected to hike its policy rate anew on Sept. 22, which comes amid the peso’s “sagging” performance against the dollar.

“[T]he US dollar/peso exchange rate, now at 57.40, still hovered near the record intraday high of 57.44 and the record closing high of 57.43 both posted on Sept. 16, 2022, as the weaker peso could lead to higher inflation,” RCBC chief economist Michael Ricafort told CNN Philippines in an email.

READ: Peso sinks further to new record-low against US dollar 

Limlingan said the PSEi could continue trading within its current range until both the Fed and BSP announce the results of their respective policy meetings.