Local stocks rose Wednesday after the government announced a lower unemployment rate in June and as investors await the release of second-quarter gross domestic product.
The Philippine Stock Exchange index advanced by 57.48 points, or 0.89 percent, to close at 6,530.45, while the broader all-shares index rose 19.05 points to 3,480.16.
Regina Capital Development Corp. managing director Luis Limlingan said investors bought Philippine stocks ahead of the GDP release and as companies reported better-than-expected second-quarter earnings.
Philstocks Financial Inc. research analyst Claire Alviar said investors also welcomed the decline in June unemployment rate.
The Philippine Statistics Authority said Wednesday unemployment rate declined to 4.5 percent in June 2023 from 6 percent a year ago, but slightly increased from 4.3 percent in May.
Market value turnover remained thin at P3.26 billion.
Meanwhile, Asian markets fluctuated after data showing China slipped into deflation compounded worries about the world number two economy›s faltering post-Covid recovery.
The mood on trading floors was already glum after another sell-off on Wall Street fueled by fresh concerns over the banking sector and talk of another possible Federal Reserve rate hike.
The 0.3 percent drop in China’s July consumer prices was the first since the start of 2021 and comes as slowing domestic spending weighs on the country›s economic recovery.
Investors were already in a dour mood a day after China announced its biggest drop in exports since the beginning of the pandemic more than three years ago, while imports also tanked owing to slimming demand at home.
An extended period of disappointing indicators out of Beijing this year has ramped up pressure on authorities to provide much-needed support to the economy.
However, while leaders have made a number of pledges in recent weeks to introduce stimulus—particularly for the property sector—there have been very few concrete moves save for some small interest rate cuts by the People›s Bank of China.
“China is in deflation, for sure, the question is for how long.” Robin Xing of Morgan Stanley said on Bloomberg Television. “It’s up to the policymakers how they react.”
Even so, observers warn that the headline-grabbing bazooka officials have unleashed in the past is unlikely owing to the country›s huge debt pile and concerns about an already weak yuan.
These figures will amplify concerns regarding China›s potential for economic growth and the efficiency of conventional measures to boost the economy,» said SPI Asset Management›s Stephen Innes.
Frankly, this is not coming as much of a surprise given (Tuesday›s) trade data signals, nonetheless it brings Mainland China one step closer to a Japanese-styled low inflation trap,» he added, referring to Japan›s decades-long battle against weak price gains and slow economic growth.
And CMC Markets› Michael Hewson warned the latest readings raised «fears that for all the promises of further stimulus measures, Chinese authorities may be facing limitations in the type of stimulus they can implement when it comes to kick starting domestic demand.
Shanghai extended the week›s losses, while Tokyo, Wellington, Mumbai and Taipei were also in the red. However, Hong Kong bounced late in the day, joining gains in Sydney, Seoul, Manila, Bangkok and Jakarta.
London, Paris and Frankfurt rallied in the morning, helped by a bounce in banks.
Traders are now keenly awaiting the release of US inflation data Thursday, hoping for an idea about the Fed›s plans for rates.
After announcing a hike last month, officials said they would be more data-dependent on future decisions, fanning hopes it would stop hiking.
But a mixed jobs report last week and hawkish comments from some policymakers have caused a little uncertainty among investors, dealing a blow to a market rally.
A decision by Moody›s to downgrade 10 regional US banks and put another six on watch for a possible cut revived concerns about the sector after March›s upheaval, dragging on sentiment.
That came after Italy announced a windfall tax on the country›s lenders, battering their stock prices in a sell-off that spread to banks in France and Germany. With AFP
