Market tumbles following Wall St's sharp retreat

The Philippine Star 06/07/2006

Share prices closed 0.63 percent lower yesterday following Wall Street’s sharp overnight retreat but some selective bargain-hunting in late trade limited the downside, dealers said.

They said sentiment got a jolt from the fresh losses on Wall Street sparked by hardline comments on the inflation risk from US Federal Reserve chairman Ben Bernanke.

The composite index ended 14.61 points down to 2,289.80, after trading between 2,270.38 and 2,304.41. Volume was 1.6 billion shares worth P868.9 million.

The broader all-shares index fell 8.95 points to 1,434.28.

Losers outnumbered gainers 61 to 16, with 42 stocks unchanged.

"The market is and will remain in a downward bias as we continue to be influenced by interest rate hike concerns in the US," said Nestor Aguila of DA Market Securities.

With no strong leads on the domestic front, Manila moved in line with other markets in the region, which all tracked Wall Street’s sharp retreat.

Inflation worries in the United States due to higher oil prices and signals that the US Federal Reserve will continue to lift rates pulled down the Dow Jones industrial average by nearly 200 points on Monday.

Philippine equities fell sharply early on in response but recovered slightly in late trade as some investors took advantage of the falls to buy stocks viewed as oversold.

Dealers said investors largely ignored the latest inflation data which showed the rise in consumer prices slowed to 6.9 percent year-on-year in May from a rise of 7.1 percent in April.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the lower inflation rate gives the bank enough leeway to keep its benchmark interest rates steady for the time being.

Metropolitan Bank retreated 50 centavos to P34.50.

Ayala Corp. fell P5 to P397.50 while unit Ayala Land was steady at P13.

San Miguel A and B shares were unchanged at P64 and P71.50, respectively.

Bernanke said at a bankers’ conference in the US that recent increases in measures of inflation "are unwelcome" and he will ensure the trend isn’t sustained.

The Fed has raised its benchmark interest rate at each of its past 16 policy meetings and further increases in borrowing costs may curb spending in the US, which buys about a fifth of Philippine exports. Filipinos based in the US also account for about half of the money sent home by overseas workers.

Any decline in exports or remittances from abroad may hurt the economy. Exports account for some two-fifths of gross domestic product and remittances about a 10th. – AFP

 

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