Shares drop as oil’s climb kindles inflation fears

STOCKS dropped on Monday as Ukraine refused to surrender to Russia, which caused oil prices to rise anew, raising fears of an earlier-than-expected rate hike by the Bangko Sentral ng Pilipinas (BSP) to tame inflation.

The benchmark Philippine Stock Exchange index (PSEi) fell by 51.03 points or 0.72% to close at 6,956.60 on Monday, while the broader all shares went down by 20.41 points or 0.54% to 3,697.63.

“The market [is] apparently apprehensive about reversals in the Ukraine-Russia ceasefire talks, which means oil prices will remain elevated as well as inflation expectations, threatening corporate profit margins and potentially limiting policy space for the BSP to keep interest rates low and steady,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.

“Philippine shares slid with oil prices climbing once more and investors continuing to digest the recent Fed (US Federal Reserve) rate hike decision and developments over Ukraine-Russia peace talks,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.

Ukraine on Monday rejected Russian calls to surrender the port city of Mariupol, where residents are besieged with little food, water and power in a humanitarian crisis that is increasing pressure on European leaders to toughen sanctions on Moscow, Reuters reported.

Ukraine’s government defiantly rejected Russian calls for Ukrainian forces in Mariupol to lay down their arms in exchange for safe passage out of the city and humanitarian corridors to be opened from 1000 Moscow time (0700 GMT) on Monday.

Mariupol has suffered some of the heaviest bombardments since Russia invaded Ukraine on Feb. 24. Many of its 400,000 residents remain trapped as fighting rages on the streets around them.

Oil prices also lost ground last week, but were pushing higher on Monday as there was no easy replacement for Russian barrels in a tight market.

Brent was quoted $3.32 higher at $111.25, while US crude rose $3.36 to $108.06 a barrel.

Analysts last week said they expect the Philippine central bank to raise benchmark interest rates before mid-2022 to quell inflation amid the Russia-Ukraine crisis.

Majority of the sectoral indices ended in the red except for services, which rose by 7.18 points or 0.38% to 1,855.92.

Meanwhile, mining and oil declined by 279.21 points or 2.21% to 12,318.70; industrials fell by 120.69 points or 1.27% to 9,331.59; holding firms went down by 68.31 points or 1.01% to 6,644.62; property lost 24.55 points or 0.73% to 3,337.73; and financials retreated by 10.85 points or 0.66% to 1,624.33.

Value turnover decreased to P7.6 billion with 974.8 million shares changing hands from the P27.6 billion or 1.65 billion issues seen the previous trading day.

Decliners outnumbered advancers, 103 versus 78, while 53 names closed unchanged.

Net foreign selling went down to P860.2 million on Monday from P3.04 billion on Friday. — L.M.J.C. Jocson with Reuters