Stocks rose for a second day, following another record close in New York as traders welcomed Donald Trump’s promise of details on tax reform and his softer tone on China and Japan.
The Philippine Stock Exchange index, the 30-company benchmark, climbed 59 points, or 0.8 percent, to close at 7,294.67 Monday. This pushed up total gains this year to 6.6 percent.
The heavier index, representing all shares, also advanced 28 points, or 0.7 percent, to settle at 4,408.86, on a value turnover of P5.9 billion. Losers outnumbered gainers, 112 to 91, while 40 issues were unchanged.
Fix of the six sectoral indices rose, with only the services sector registering losses. Among the 20 most active stocks, 10 ended in the green, led by Metropolitan Bank & Trust Co., the second largest lender, which gained 2.7 percent to P79.35 and conglomerate Ayala Corp. which went up 2 percent to P809.
Meanwhile, most Asian shares followed the lead of Wall Street, where shares soared at the end of the week after the new US president finally broke his silence over fiscal policy, saying he would unveil a “phenomenal” tax plan within three weeks.
That was followed by his affirmation that he recognizes Beijing’s “One China” policy towards Taiwan and a positive weekend meeting with Japanese Prime Minister Shinzo Abe.
The developments fueled some much-needed relief to traders who had grown increasingly worried about Trump’s outbursts against both countries’ trade policies and his lack of detail on the domestic front.
“This is a big relief for investors given that Trump’s previous stance had raised serious foreign policy concerns, not to mention the prospect of severely damaged trade ties with the region and increased protectionism,” said Craig Erlam, senior market analyst at Oanda trading group.
Adding to the positive atmosphere was a forecast-busting reading on Chinese trade, which raised hopes a growth slowdown in the world’s number two economy could be bottoming out.
Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said in a note that the “apparently more conciliatory president Trump… added to the positive sentiment”.
He said: “Looking at the stock market rally specifically it’s worth noting that psychology is important in markets and it’s clear traders still want to believe in Donald Trump.”
Japan’s Nikkei ended 0.4 percent higher as a weaker yen continued to support the country’s exporters.
There was little excitement over data showing the Japanese economy grew one percent last year and enjoyed its longest run of expansion since 2013.
Hong Kong was up 0.4 percent in the afternoon while Shanghai ended up 0.6 percent. Sydney put on 0.7 percent and Seoul added 0.2 percent. Singapore, Taipei and Wellington also posted healthy gains.
Attention now turns to Federal Reserve boss Janet Yellen’s two-day testimony to Congress this week, which will be pored over for clues about the bank’s plans for monetary policy.
Oil prices retreated Monday after surging at the end of last week in response to comments from the International Energy Agency, that OPEC countries are broadly complying with a deal to reduce output and address a global glut.
The increase in demand for riskier assets also weighed on gold, which is considered a safe bet in times of turmoil. The precious metal dipped 0.3 percent to $1,230 Monday and is well off the levels around $1,245 on Thursday. With AFP, Bloomberg
