Stocks rally toward 8,300

posted September 18, 2017 at 07:01 pm
by  Manila Standard Business

Stocks rallied for a fifth day, sending the benchmark index Monday to a new all-time high near 8,300 points, following a record-breaking Wall Street session amid optimism the US will pursue a peaceful resolution to North Korea’s nuclear threats.

The Philippine Stock Exchange index, the 30-company benchmark, jumped 113 points, or 1.4 percent, to close at 8,294.14 Monday. It was also up 21.2 percent since the start of the year.

The broader all-share index also gained 50 points, or 1 percent, to settle at 4,886.48, on a value turnover of P8.1 billion.  Gainers outnumbered losers, 121 to 83, while 46 issues were unchanged.

Thirteen of the 20 most active stocks ended in the green, led by developer Filinvest Land Inc. which climbed 5.4 percent to P2.13 and conglomerate Ayala Corp. which advanced 4.7 percent to P972.  SM Investments Corp., the holding company of tycoon Henry Sy, rose 4 percent to P868.50.

Meanwhile, Asian markets posted healthy gains on Monday following another record finish on Wall Street, while the focus turns to the Federal Reserve’s next policy meeting later in the week.

Investors will be keeping a close watch on the US central bank as policymakers have to deal with the fallout from hurricanes Harvey and Irma, which hammered the country and are expected to hit economic growth.

While it is tipped to keep borrowing costs on hold, the bank’s plans for cutting back crisis-era bond-buying stimulus and any signals for the future of interest rates will be pored over.

However, analysts were unsure about any further increases this year with inflation remaining subdued –apart from a bigger-than-expected jump in August—and other indicators still soft.

Despite the likely move to tightening, stock markets remain buoyant and on Friday the Dow and S&P 500 each closed at all-time highs.

In Asia on Monday Hong Kong ended up 1.3 percent, Shanghai closed 0.3 percent higher and Sydney rallied 0.5 percent. Singapore added almost one percent, with Seoul jumping 1.4 percent and Taipei up 0.5 percent. 

Japanese markets were closed for a public holiday.

“Ultimately draining the economy of cheap money can’t be viewed as a positive for markets accustomed to feeding off central bank largess. Why investors are so complacent is a mystery, but perhaps the reality check will set in midweek,” said Stephen Innes, head of Asia-Pacific trading at Oanda.

While the Fed mulls its next move the pound continues to shine against the dollar after the Bank of England last week indicated it will likely tighten monetary policy itself very soon.

After a big increase in inflation, the bank’s governor Mark Carney said Thursday the chances of a hike had increased, followed on Friday by another board member signalling a move in “the coming months”.

The remarks come as central banks shift from their easy-money policies with the world economy slowly improving, with the European Central Bank also set to wind in its own stimulus.

The pound was holding above $1.36 and is sitting around its highest levels since Britain voted to leave the European Union in June last year.

Fears over North Korea receded soon after Friday’s second missile test in a month. While the launch over Japan revived geopolitical worries -- also coming soon after its provocative nuclear test -- analysts said investors were calm for now.

“With the latest missile test we really didn’t see much of a market footprint at all,” Todd Elmer, Citigroup’s head of G10 forex strategy for Asia ex-Japan, told Bloomberg Television.

“What that signals is that investors are not inclined to extrapolate that provocation into any major flareup in geopolitical tension.”

Euopean stocks and US futures also rose with equities in Australia and Hong Kong. The S&P 500 climbed above 2,500 for the first time on Friday and the Dow Jones Industrial Average chalked another record close as investors shrugged off the latest North Korean missile test. The dollar was steady after declining on Friday when US retail sales raised concerns about the strength of the economy.

The US seeks a peaceful resolution but is prepared to use military force if diplomatic efforts fail to end the nuclear standoff with North Korea, Secretary of State Rex Tillerson told CBS. The comments were made ahead of U.S. President Donald Trump’s first address before the United Nations on Tuesday as foreign leaders gather in New York to discuss how to deter North Korea from enhancing its nuclear capability.

Meanwhile, Japanese Prime Minister Shinzo Abe is weighing holding a snap general election as early as next month amid growing support for his handling of the North Korea crisis, according to public broadcaster NHK. With AFP, Bloomberg

Topics: Stocks , Philippine Stock Exchange
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