Local stocks rose Wednesday, driven by last minute bargain hunting and expectations of higher second-quarter corporate earnings.
The 30-company Philippine Stock Exchange index gained 18.02 points, or 0.27 percent, to close at 4,479.13.
Philstocks Financial Inc. research analyst Claire Alviar said the market took positive cues from Wall Street.
“The sentiment was further boosted as the IMF [International Monetary Fund] upwardly revised its economic growth forecast for the year from 6 percent to 6.2 percent on the back of strong domestic demand,” Alviar said.
Trading value remained thin at P3.8 billion as investors continued to focus on the US Federal Reserve’s upcoming interest rate decision.
Meanwhile, Asian equities were mixed Wednesday as the previous day’s China-induced rally gave way to cautious trading ahead of a Federal Reserve policy decision, with fresh data reviving the possibility of more rate hikes before the end of the year.
Regional equities surged Tuesday in response to Beijing’s pledges of stimulus, particularly the property sector, after a string of readings showed the post-Covid recovery was going off the rails.
But focus has now returned to central banks’ battle to tame inflation, with the Fed tipped to deliver another increase in borrowing costs later in the day.
While the result of the meeting is largely accepted, debate is now centered on whether it will announce another hike later in the year.
There had been hopes that this month would see the end of the tightening cycle but data Tuesday showing a key gauge of consumer sentiment at a two-year high has stoked talk of more to come.
Post-meeting comments by bank chief Jerome Powell will be closely followed for an idea about officials’ plans for the rest of the year.
Ann Miletti, at Allspring Global Investments, said figures showing the economy still healthy was weighing on the minds of policymakers, who are determined to bring inflation down to their two-percent goal, from the current three percent.
“They still fear that if they release the pressure too early, things could go back in the opposite direction,” she told Bloomberg Radio.
“I just don’t think they’re willing to take that risk.”
CMC Markets analyst Michael Hewson added: “While Powell will try and make the case for further rate hikes, his time would be better spent in making the case for rates remaining higher for longer, and projecting when the (policy board) expected the two percent target to be met.”
Wall Street ended on a positive note with the Dow recording its 12th straight gain, the longest winning run in more than six years, while the S&P 500 finished at its highest since April 2022.
Sentiment in New York was supported by the International Monetary Fund lifting its 2023 global growth forecast on the back of resilient service-sector activity and a strong labor market.
After the Fed’s had its day, attention turns to the European Central Bank, which announces its own decision Thursday, followed by the Bank of Japan on Friday.
Asian investors were unable to maintain the momentum from Tuesday.
Hong Kong dipped a day after powering more than four percent higher, while there were also losses in Shanghai, Seoul, Taipei and Bangkok.
Sydney enjoyed a pick-up as a bigger-than-forecast drop in inflation fanned hopes the Australian central bank will hold off hiking rates at its next gathering.
Singapore, Wellington, Manila, Mumbai and Jakarta were also slightly higher, while Tokyo was flat.
London, Paris and Frankfurt were down in the morning.
While China’s pledges of support for the economy gave traders a much-needed boost, analysts said they will now want to see some tangible policies coming out of Beijing.
Morgan Stanley said action was crucial, particularly in the troubled property sector, before a market rally could be sustained, and warned a lack of movement could dent sentiment further.
“More details for solutions for longer-term structural challenges need to follow through in the coming months — this, along with further stabilization in geopolitical uncertainty, is necessary for a more sustainable equity market recovery,” wrote Laura Wang, the bank’s chief China strategist.
And SPI Asset Management’s Stephen Innes added that “investors have moved into action-speaks-louder-than-words mode”. With AFP