Stocks, peso advance; ALI, Globe top gainers

The peso and the local stocks advanced Tuesday, as global markets rallied, with sentiment boosted by the UK government’s decision to row back on a controversial debt-funded mini-budget.

The PSE index, the 30-company benchmark of the Philippine Stock Exchange, jumped 158 points, or 2.6 percent, to close at 6,128.64 as all six subsectors posted gains. The property subindex surged 4.2 percent.

The broader all-share index also gained 54 points, or 1.7 percent, to settle at 3,253.51 on a value turnover of P4.82 billion. Gainers outnumbered losers, 109 to 73, while 52 issues were unchanged.

Eight of the 10 most active stocks ended in the green, led by Ayala Land Inc. which climbed 7.7 percent to P25.80 and parent Ayala Corp. which went up 6.4 percent to P649.00. Globe Telecom Inc. added 4.8 percent to close at P2,306.00.

The peso also recovered Tuesday to close at 58.75 per US dollar on currency trading volume of $610 million from the previous day’s record-low level of 59 against the greenback.

Meanwhile, Hong Kong stocks posted healthy gains, with the Hang Seng Index jumping 1.82 percent, or 301.68 points, to 16,914.58.

The Shanghai Composite Index dipped 0.13 percent, or 3.98 points, to 3,080.96, while the Shenzhen Composite Index on China’s second exchange added 0.36 percent, or 7.27 points, to 2,005.08.

Equities rose with sterling Tuesday after the UK government scrapped a controversial debt-funded mini-budget that had roiled markets, while traders were also cheered by a broadly positive start to earnings season.

After a volatile few weeks during which the pound hit a record low, new finance minister Jeremy Hunt sought Monday to reassure investors as he unveiled a new spending package, doing away with tax cuts and warning of much lower spending.

The move—which deals a blow to Prime Minister Liz Truss’s authority—sent sterling up as much as two percent at one point and the cost of government borrowing tumbled, while the FTSE 100 jumped.

The positive mood filtered through to other markets, with Wall Street enjoying a much-needed surge, including a more than three percent jump in the Nasdaq.

And most of Asia followed suit, with Tokyo, Hong Kong, Singapore, Mumbai, Bangkok, Sydney, Seoul, Wellington, Taipei and Jakarta all enjoying a pick-up, though Shanghai dipped.

London opened on the front foot along with Paris and Frankfurt.

The pound was also given an extra boost—at one point topping $1.14—after a Financial Times report said the Bank of England will likely put off the sale of government bonds again as it looks to maintain market stability.

The Bank had been due to offload the gilts—bought to keep borrowing costs down during the pandemic –from Oct. 6 but delayed that because of the turmoil sparked by the mini-budget, but the FT said it would likely delay again until financial conditions had calmed.

The market gains built on Monday’s rise, though analysts warned that the advances were unlikely to be sustained owing to broader worries about inflation and rising interest rates.

“The last couple of months have been tough for equity markets since peaking towards the end of the summer and a rebound of some kind was going to happen eventually,” said OANDA’s Craig Erlam.

“I’m just not convinced there’s much substance behind it as the economic landscape looks treacherous and we don’t even know if we’re at peak inflation and interest rate pricing yet. Those are substantial headwinds that will make any stock market rebound extremely challenging.”

The latest data out of New Zealand showing inflation remained at a three-decade high underscored the tough job central banks have in bringing prices down, even after several rate hikes.

Commentators said traders have come to the conclusion that a recession is on the way in major economies, with the main question being how bad it will be.

“I think we can stop saying inflation is ‘hotter than expected’ and shift to ‘hotter than hoped’ — because it really does feel like we’re all just crossing our fingers and hoping prices come down,” said Matt Simpson at City Index.

“And in the few cases that they are, it is clearly not fast enough for anyone’s liking. Conversely to the adage about stock market prices, inflation seems to get the elevator up and the escalator down — but not before lingering around the top floor for an extended period of time.” With AFP