Stocks plunge after inflation report

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Metro Manila (CNN Philippines, July 5) — The stock market closed in the red today after inflation for June showed a fresh five-year high.

The Philippine Stock Exchange ended trade at 7,233.57 points, a 1.56 percent drop from yesterday's close of 7,348.42 points. This broke the market's four-day winning streak.

All sub-indices ended in the red, with holding firms losing the most by 2.09 percent. This was followed by the industrial sector, financials, property, and services respectively.

The mining and oil sub-index managed to weather today's blows, losing a mere 0.02 percent.

Meanwhile, the Bangko Sentral ng Pilipinas released today its latest foreign portfolio investments (FPI) data.

Hot money as of June 22 posted a net gain of $445.51 million dollars, with $8.43 billion cash inflow and $7.99 billion outflow. The country's FPI has been at a continuous loss since the second week of May. 

Traders attribute these losses to today's inflation report. The Philippine Statistics Authority announced that commodity prices spiked by 5.2 percent last month, the highest in five years.

READ: Commodity prices breach five-year high in June

"Suffice it to say that the market didn't like June's inflation figure of 5.2% at all. The official result went above all expectations," said Gio Perez of Papa Securities Corporation.

Perez noted that Metropolitan Bank & Trust Co., SM Investments Corp., and Universal Robina Corp. posted the biggest losses today.

Luis Limlingan of Regina Capital said the continuing price increases may lead to another hike in interest rates during the next meeting of the Monetary Board.

"The implications pulled down the market further, with many already pointing to a third rate hike during the August 9 meeting," Limlingan said. "Some have hinted that a 50 basis point hike is needed over the traditional 25 basis points."

READ: BSP raises interest rates anew to tame inflation