Stocks retreat as ‘ghost month’ nears

MANILA, Philippines — Local stocks ended in the red yesterday as investors consolidated their positions ahead of the August “ghost month” – a period traditionally characterized by slow trading activity, minimal financial dealings, and red portfolios all around.

The benchmark Philippine Stock Exchange index (PSEi) closed at 6,625.26, down by 52.66 points or 0.79 percent, while the broader All Shares index slipped to 3,526.92, down by 20.08 points or 0.57 percent.

Total value turnover was thin at P2.9 billion. Market breadth was negative, 103 to 69, while 54 issues were unchanged.

In a note, Unicapital Securities said the market has been digesting the US Federal Reserve’s 25-basis-point rate hike and Fed Chair Jerome Powell’s statement regarding the possibility of another rate hike this September.

“Going forward, we expect the earnings season to drive stock-specific price actions ahead of further statements from the Fed and the BSP meeting. As we enter the August ghost month amid sticky US recession fears and potential build-up of concerns of another Fed rate hike, we expect the market to consolidate in the coming weeks,” it said.

Elsewhere in Asia, equities were mixed after forecast-beating US data revived concerns the Fed could hike interest rates further.

The Fed said Wednesday that future rate decisions would be determined by data, which was welcomed by investors who saw recent indicators – pointing to an easing of price pressure and softening of the labor market – as giving it room to hold off more increases.

However, news that US growth beat expectations in the second quarter as jobless claims slipped revived the possibility that there was still more work to do.

In Japan, the Nikkei 225 index sank more than two percent on the prospect of higher borrowing costs before paring the losses by the close.

“The Bank of Japan’s decision to tweak their yield curve control was broadly in line with what the market had anticipated, but probably not as hawkish as previously feared,” said Khoon Goh, of Australia & New Zealand Banking Group.

Traders had been on edge ahead of the announcement due to fears that tighter monetary policy would see Japanese investors – the biggest foreign owners of US Treasuries with vast holdings of other global assets – move their cash back home owing to better returns.