Stocks rose for a fourth day, sending the benchmark index above the 6,200 level while the peso sustained its rebound against the US dollar as traders grow increasingly hopeful the Federal Reserve will slow its pace of interest rate hikes.
The PSE index, the 30-company bellwether of the Philippine Stock Exchange, jumped 109 points, or 1.8 percent, to close at 6,230.58 Thursday, as five of the six subsectors advanced.
The heavier all-share index also moved up 39 points, or 1.2 percent, to settle at 3,282.38 on a value turnover of P5.6 billion. Gainers led losers, 123 to 55, while 44 issues were unchanged.
Eight of the 10 most active stocks ended in the green, led by Security Bank Corp. which climbed 5.8 percent to P86.50 and Universal Robina Corp. which added 5.1 percent to finish at P122.00.
The peso gained P0.21 Thursday to settle at 58.22 against the greenback from the previous day’s 58.43 as trading volume improved to more than $1 billion from $846 million.
Meanwhile, the euro, pound and yen all held their gains against the dollar and most equities rose. Hong Kong led the gains thanks to a surge in tech firms, extending a recovery from Monday’s rout that was fueled by worries of Xi Jinping’s tightened grip on power in China.
After a painful year for markets hit by central bank rate hikes to fight soaring inflation, investors have taken heart from several weak US indicators—the latest on the services and real estate sectors—suggesting the economy is slowing.
That has led to speculation officials could be ready to tap the brakes on the increases, while some Fed policymakers have also raised the possibility of a slowdown.
The optimism was boosted Wednesday by news that the Bank of Canada had raised rates less than expected and signaled it is ready to wind down.
“The downshift at the Bank of Canada has further fanned the winds of a similar move by the Fed come December and comes after the (Australian central bank) slowed the pace of hikes to 25 basis points at its October meeting,” said National Australia Bank’s Taylor Nugent.
The news weighed on the dollar, which has surged against other currencies all year owing to the Fed’s rate drive, as US Treasury yields drop.
And on Thursday the euro held above parity with the greenback, a day after breaking the marker for the first time since last month and ahead of an expected European Central Bank rate hike.
The ECB meeting “really depends on not what (it) delivers, but what sort of guidance… President Christine Lagarde offers over future moves going forward for December, at a time when EU inflation is still showing little sign of slowing,” said Micahel Hewson of CMC Markets.
The yen held around 146 per dollar, having hit a 32-year low near 152 on Friday, and sterling was also holding above $1.16 after last month hitting a record low $1.0350 in reaction to then-prime minister Liz Truss’s debt-fueled mini-budget.
The pound was also enjoying support after former finance minister Rishi Sunak became prime minister, giving hope for some stability after months of upheaval.
The positive performance was mirrored in equity markets, with Hong Kong rising one percent at one point thanks to a rally in beaten-down tech shares.
The Hang Seng Index’s advance follows a rout on Monday in response to Xi’s tighter grip on power and his decision to put in top posts loyalists who backed his zero-Covid strategy of lockdowns.
Among the standout performers, ecommerce giant Alibaba jumped more than eight percent and rival JD.com piled on more than 10 percent. The Hang Seng Tech Index was four percent higher.
The advances came after outsized gains for the firms’ New York-listed shares.
Sydney, Seoul, Singapore, Taipei, Bangkok, Mumbai, Jakarta and Wellington also rose. However, Tokyo and Shanghai slipped.
London edged up in the morning but Paris and Frankfurt eased back.
Analysts remain cautious owing to the fact inflation is stuck at multi-decade highs in various countries, while the Fed’s November meeting is now in focus.
“The Fed won’t blink next week and the risk of a 75 basis point hike in December should still remain on the table,” said OANDA’s Edward Moya. With AFP