Stocks advanced Thursday, catching up with gains in other markets after US President Donald Trump’s tax reform bill finally passed through Congress, giving him a much-needed legislative victory.
The Philippine Stock Exchange index, the 30-company benchmark, rose 15 points, or 0.2 percent, to close at 8,378.28, as three of the six major sectors posted gains. The bellwether was also up 22.5 percent since the start of the year.
The heavier index, representing all shares, ended flat at 4,892.80, on a value turnover of P6.3 billion. Losers outnumbered gainers, 104 to 101, while 41 issues were unchanged.
Nine of the 20 most active stocks ended in the green, led by restaurant operator Jollibee Foods Corp. which climbed 1.6 percent to P247.80 and developer Megaworld Corp. which went up 1.2 percent to P5.16. Bank of the Philippine Islands gained 0.8 percent to P105.50.
Global equities have rallied this year on expectations the president’s promised cuts would fire the already strong economy and those gains increased over the past week as it became clear that months of bargaining would see them eventually pushed through.
Trump proclaimed “we are making America great again” to Republican lawmakers at the White House after their victory.
However, with the uncertainty out of the way traders decided to cash in.
“President Trump finally has a piece of legislation passed. There has already been a lot of optimism priced in,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.
“I believe this is a perfect example of buy the rumor sell the news. We may see a bit of profit-taking coming into the back end of the year,” Chanel said.
“I believe the next catalyst for the upside will be reductions in regulations once Jerome Powell takes over the helm at the US Federal Reserve. The lack of reaction by the markets overnight is testimony (to) the level of optimism already being priced in.”
All three main Wall Street indexes ended lower, having broken various records in recent weeks, and most of Asia followed.
Tokyo ended 0.1 percent lower, with dealers unmoved by the Bank of Japan’s decision to keep interest rates on hold and stand pat on its stimulus program.
Sydney was 0.3 percent off and Seoul sank 1.7 percent, while Singapore gave up 0.1 percent. Wellington, Taipeiand Bangkok were all well down.
But Hong Kong rose 0.5 percent and Shanghai ended 0.4 percent higher.
The dollar also struggled despite expectations the across-the-board tax cuts would likely fan inflation and lead to higher interest rates.
Greg McKenna, chief market strategist at AxiTrader, said: “Forex traders remain nonplussed about the US dollar, which continues to struggle to gain traction.
“I ask you if the governments of the EU had got together to pass a tax cut what would the impact on the euro be. Not nothing, that’s for sure.”
Dollar traders are now looking ahead to the release of US personal consumption data Friday, which could provide some idea about the Fed’s plans for monetary policy next year.
With AFP, Bloomberg