MANILA, Philippines — Local shares ended the first trading day of the week on a sour note after sinking below the 6,500-level, joining a global rout triggered by fears of a more aggressive tightening by the US Federal Reserve amid red-hot inflation stateside.

It was another ugly trading day after the Philippine Stock Exchange index shed 0.96% to close at 6,467.01 on Monday. The broader All Shares index tumbled by a bigger 1.05% as all sectoral counters finished in the red.

The US markets continue to be weak as they digest the higher inflation figure, which can weigh on the PSEi. However, on our side, our inflation risk is not the same magnitude as the US, Michael Enriquez, chief investment officer at Sun Life Investment Management and Trust Corp., said in a Viber message.

Data released last week showed US inflation soared to 8.6% in May, a reading that was last seen in December 1981.

The faster-than-expected price growth stateside stoked fears that the US central bank might attack inflation more aggressively through bigger interest rate hikes.

A more combative Fed tightening could stoke capital outflows in emerging markets like the Philippines. At home, the Bangko Sentral ng Pilipinas fired off its first rate hike in over three years in May to tame inflation, with another hike expected this month.

Apart from concerns over the Feds next move, Covid outbreaks in Shanghai and Beijing have sparked fears of another round of harsh restrictions in China, which could cripple the worlds second largest economy anew.

Elsewhere in Asia, stock markets in Hong Kong, Tokyo and Seoul were down more than 3% on Monday while Mumbai, Jakarta, Taipei, Jakarta and Wellington were off more than 2%. Shanghai, Singapore, and Bangkok also skidded.

For Rastine Mercado, research head at Chinabank Securities, local shares could drop lower this week.

I think a test of 6,380 is still possible this week, but given todays price action, were already seeing some buying appetite above such levels which may lead to an oversold rally buoyed by bargain-hunting, Mercado said.

Nevertheless, developments from offshore markets may still factor into domestic sentiment, so its important to watch out for that as well, Mercado added.

At home, foreign investors sold P624.3 million more shares than they bought in the stock market. A total of 761.7 million stocks, valued at P5.37 billion, switched hands on Monday.