Stocks surged Monday to track the movement of global markets on hopes that China may begin to roll back policies aimed at stamping out the disease within its borders.
The PSE index, the 30-company benchmark, gained 110 points, or 1.8 percent, to close at 6,295.58 as five of the six subsectors advanced, led by the property subindex which climbed 3.5 percent.
The broader all-share index also picked up 39 points, or 1.2 percent, to settle at 3,313.57 on a value turnover of P4.5 billion. Advancers outnumbered losers, 117 to 62, while 50 issues were unchanged.
Seven of the 10 most active stocks ended in the green, led by International Container Terminal Services Inc. which climbed 6.9 percent to P190.00 and SM Prime Holdings Inc. which went up 5.3 percent to P34.00. Ayala Corp. also added 5 percent to finish at P657.00.
The peso slightly declined to close at 58.58 against the US dollar Monday from 58.55 Friday. The local currency depreciated by 14.9 percent against the greenback this year as the Fed aggressively increased its interest rates from near zero at the height of the pandemic to put inflation under control.
Meanwhile, Asian stocks made gains on Monday, with a fresh rally seen in Hong Kong even after China reaffirmed its commitment to its economically painful zero-Covid policy.
The Chinese government said on Saturday it would “unswervingly” stick to its current plan, which involves harsh lockdowns, with strict quarantine and testing regimens for even the smallest clusters of cases.
Despite the official stance, “there are still hopes in the market” that Beijing may relax Covid-19 restrictions in the coming months, Iris Pang, chief economist for Greater China at ING Wholesale Banking, told AFP.
“Traders believe that the Chinese government cannot permanently hold these existing Covid measures, and therefore the only direction is… looser Covid measures,” she said.
Ongoing large-scale events, such as the China International Import Expo in Shanghai, are also seen by investors as “a kind of water-testing” by Beijing, to see if cases and deaths rise significantly, Pang added.
On Friday, Wall Street equities ended a volatile session higher after the latest US jobs data showed that hiring remained resilient and wages continued to rise, though at a slower pace. With AFP
The data, released days ahead of critical US midterm elections, raised hopes of a soft landing for the world’s biggest economy despite aggressive Fed rate hikes aimed at taming inflation.
All three main US indexes ended around 1.3 percent higher on Friday, and Tokyo shares extended those gains, with the benchmark Nikkei index ending 1.2 percent higher on Monday.
Hong Kong shares dipped slightly at the open, then rocketed over three percent, adding to a jump of more than five percent in the previous session.
Bourses in Shanghai and Shenzhen edged up 0.2 percent and 0.4 percent respectively.
China is the last major economy wedded to a strategy of extinguishing Covid-19 outbreaks as they emerge, despite the widespread disruption to businesses and international supply chains.
“Last week, the financial market was stirring on rumours of China reopening,” Raymond Yeung and Zhaopeng Xing of ANZ Research said in a note.
“Obviously, China feels the urgency to normalise the economy… But the political leadership will not adopt ‘living with Covid’,” the pair said.
“In our view, the availability of locally developed new vaccines will be a game changer”.
Seoul rose 0.9 percent, Taipei was up 1.5 percent and Sydney was up 0.6 percent. Jakarta added 0.2 percent, and Singapore was flat.
Dashed hopes of a Chinese reopening also drove down oil prices, which had rallied on Friday on the optimism that Beijing could soon change course, pushing up demand for crude. With AFP
