PSEi sinks as PHL logs first cases of new variant

STOCKS dropped on Wednesday after the country logged its first cases of the Omicron variant of the coronavirus disease 2019 (COVID-19) and ahead of the US central bank’s policy decision.

The bellwether Philippine Stock Exchange index (PSEi) plunged by 109.41 points or 1.51% to close at 7,132.58 on Wednesday, while the broader all shares index fell 59.10 points or 1.53% to 3,782.59.

“Philippine shares succumbed to panic selling as the first the country logged its first cases of the Omicron variant,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Investors want to see whether COVID-19 cases will be contained and if the government will impose tighter mobility restrictions to prevent infections from increasing, Mr. Limlingan said.

The Health department on Wednesday said it detected the first two cases of the Omicron variant in the country just a few hours after the national task force announced the country will remain under the less restrictive Level 2 until Dec. 31.

The World Health Organization said the Omicron variant poses “very high” global risk as it is now recorded in more than 60 countries, Reuters reported.

“The PSEi also corrected lower as US stock market corrected lower for the second straight day amid the highest US producer prices since records started in 2010 at 9.6% which could increase the odds of more hawkish Federal Reserve, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

US producer prices increased more than expected in November as supply constraints persisted, leading to the biggest annual gain since the series was revamped 11 years ago and supporting views that inflation could remain uncomfortably high for some time, Reuters reported. Producer prices increased 9.6% year-on-year, and 0.8% in November after increasing 0.6% in October.

Meanwhile, the Fed was expected to announce its policy decision overnight following its Dec. 14-15 meeting.

Back home, all sectoral indices closed in the red on Wednesday. Property plunged 76.45 points or 2.34% to 3,184.46; holding firms dropped 102.04 points or 1.44% to 6,940.35; mining and oil fell 124.06 points or 1.34% to 9,098.83; services declined 25.95 points or 1.31% to 1,947.99; financials lost 20.76 points or 1.27% to 1,607.92; and industrials decreased 103.92 or 1% to 10,231.32.

Value turnover soared to P11.35 billion with 1.33 billion issues switching hands on Wednesday from the P7.6 billion with 1.33 shares traded the previous day.

Decliners outnumbered advancers, 142 versus 58, while 54 names remained unchanged.

Net foreign buying decreased to P237.63 million from the P457.94 million recorded the previous trading day.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message that the PSEi’s support for this week is at 6,795, while resistance is at 7,265. — MCL with Reuters