Stocks gain; Nickel Asia advances

The stock market extended its gains Friday along with the rest of Asia, ahead of the State of the Nation Address of President Rodrigo Duterte on July 22.

The Philippine Stock Exchange Index added 12.02 points, or 0.2 percent, to 8,270.07 on a value turnover of P6.7 billion. Losers, however, edged gainers, 102 to 94, with 53 issues unchanged.

Bank of the Philippine Islands, the third-biggest lender in terms of assets, rose 1.1 percent to P93, while Nickel Asia Corp., the largest nickel producer, jumped 11.1 percent to P2.70. 

Megaworld Corp., the biggest lessor of office spaces, advanced 3 percent to P6.44, while parent Alliance Global Group Inc. of tycoon Andrew Tan climbed 2 percent to P15.90.

Asian markets, meanwhile, rallied Friday as comments from a top Federal Reserve official were pounced on by investors as indicating the central bank will unveil a deep interest rate cut at the end of the month.

John Williams, the influential vice chairman of the Fed’s policy-setting board, said in a speech that central banks should move quickly to support the economy when borrowing costs were already low.

He pointed to studies suggesting that when there are few stimulus options available, officials should “move more quickly than you otherwise might” rather than waiting “for disaster to unfold.”

While a spokesman later clarified that Williams was not outlining Fed policy and was not flagging a half-point cut, analysts said the remarks provided an insight into how officials were thinking.

Markets have been wavering this week over how big the bank’s expected reduction would be, with 25 basis points priced in but traders hoping for 50.

“Williams’ remarks put probabilities of multiple rate cuts higher after strong economic indicators had put doubts on the number of rate reductions this year and how deep the cut will be,” said OANDA senior market analyst Alfonso Esparza.

Wall Street ended in positive territory and Asia was on course to end the week on a strong note, despite concerns about the global outlook and a lack of progress in China-US trade talks.

Tokyo ended two percent higher, while Hong Kong added one percent and Shanghai finished up 0.8 percent.

Seoul jumped 1.4 percent, Singapore gained 0.4 percent and Sydney put on 0.8 percent with Taipei adding 0.7 percent. Wellington and Jakarta were also well up, but Mumbai fell more than one percent in disappointment with government plans for a super-rich tax.

Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co, warned that weakness in the world economy would eventually drag on markets.

“I don’t think a few rates cuts is going to make the difference, whether it’s 25 or 50 basis points at the end of this month,” he told Bloomberg TV. “While the bond market is pricing in a realistic probability of the slowdown, stocks have gone the other direction this year and may be in for a surprise.”

Bets on lower rates were also providing support to higher-yielding, riskier currencies with the Australian dollar and South Korean won climbing 0.6 percent and the Indonesian rupiah 0.5 percent higher. South Africa’s rand, the Turkish lira and Mexican peso were also well up. With AFP

Topics: Stock Market , Philippine Stock Exchange Index , Philippine Stock Exchange , PSE , PSEi , Nickel Asia
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