SHARES dropped further on Tuesday as sentiment turned cautious amid extended discussions on the US debt ceiling.
The benchmark Philippine Stock Exchange index (PSEi) fell by 17.27 points or 0.26% to close at 6,603.56 on Tuesday, while the broader all shares index went down by 6.61 points or 0.18% to end at 3,527.42.
Stocks inched lower amid the “pivotal” debt ceiling talks, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“The index slipped a second day as many investors have become increasingly cautious due to uncertainty about US debt ceiling talks,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet likewise said in a Viber message.
“Any increased brinkmanship in Washington could make investors more risk averse. We don’t expect any bullish action until we see a breakthrough on the debt limit issue,” Mr. Colet added.
US President Joseph Biden and House Speaker Kevin McCarthy could not reach an agreement Monday on how to raise the US government’s $31.4-trillion debt ceiling with just 10 days before a possible default that could sink the US economy, but vowed to keep talking, Reuters reported.
The Democratic president and the top congressional Republican have struggled to make a deal, as Mr. McCarthy pressures the White House to agree to spending cuts in the federal budget that Mr. Biden considers “extreme,” and the president pushes new taxes that Republicans have rejected.
Both sides stressed the need to avoid default with a bipartisan deal after Monday evening’s meeting, however, and signaled that they’d be talking regularly in coming days.
A source familiar with the situation said that White House negotiators were returning to Capitol Hill on Monday night to resume talks.
Any deal to raise the limit must pass both chambers of Congress, and therefore hinges on bipartisan support. Mr. McCarthy’s Republicans control the House 222-213, while Mr. Biden’s Democrats hold the Senate 51-49.
A failure to lift the debt ceiling would trigger a default that would shake financial markets and drive interest rates higher on everything from car payments to credit cards.
At home, all sectoral indices fell on Tuesday, except for property, which rose by 10.92 points or 0.39% to 2,747.60.
Meanwhile, industrials dropped by 59.98 points or 0.63% to 9,376.46; mining and oil decreased by 58.75 points or 0.57% to 10,246.61; services went down by 5.20 points or 0.33% to 1,566.43; holding firms fell by 18.82 points or 0.28% to 6,564.94; and financials declined by 5.07 points or 0.27% to 1,853.06.
Value turnover declined to P6.04 billion on Tuesday with 1.16 billion shares changing hands from the P7.03 billion with 1.73 billion issues traded on Monday.
Decliners outnumbered advancers, 105 versus 80, while 44 names closed unchanged.
Net foreign selling stood at P250.17 million on Tuesday versus the P2.84 billion in net buying recorded on Monday. — A.H. Halili with Reuters