Markets reel from inflation blow

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(File photo)

Metro Manila, (CNN Philippines, September 6) — The markets are still feeling the pinch of the dismal inflation report.

The Philippine Stock Exchange (PSE) continues to bleed in all sub-indices, losing 1.47 percent overall. The trading day ended at 7,638.71, more than 100 points lower than Wednesday's close.

The peso further depreciated, closing 25-centavos lower at ₱53.8 versus the greenback. Still at a near thirteen-year low, the currency is at its weakest since December 7, 2005, when it closed at ₱53.98. 

Analysts point to the lingering effects of the inflation report and global trade concerns. The Philippine Statistics Authority reported that inflation was at 6.4 percent, the highest in nine years and higher than the Bangko Sentral ng Pilipinas (BSP)'s projection of 5.5 to 6.2 percent.

"The peso's decline can be attributed to safe haven buying amid elevated Philippine inflation and lingering trade concerns involving the US, China, and Canada. Expectations of firm US labor reports also boosted the dollar," said Guian Dumalagan, market economist for the Land Bank of the Philippines.

"There was still some intervention observed from the BSP," Dumalagan added.

Luis Limlingan, managing director of Regina Capital, said that investors in the stock market are still assessing the impact of inflation.

"Philippine shares continued to be sold with investors still assessing the impact of inflation and whether this would still continue in the succeeding periods. The performance of regional markets did not help either," Limlingan said.

Gio Perez, a trader from Papa Securities, said the PSE index fell as much as 200 points within the trading day.

"The onslaught on the PSEi continued today as it fell by as much as 200 points to its intraday low of 7,552.24, before being bought up at the close to end at 7,638.71. Negative sentiment from yesterday's August inflation figure of 6.4 percent, along with USD-PHP's upward breakout (i.e. depreciation) from its recent consolidation weighed heavily on the index," Perez said.

He noted that Alliance Global Group Inc. (AGI), DMCI Holdings, Inc. (DMC) and Metro Pacific Investments Corporation (MPI) recorded the largest losses for the day. 

"We look forward if the 7,500 support level will hold tomorrow, more so that foreign selling continues to be strong with two consecutive days of having figures above ₱1 billion," Perez said.