Local stocks and the peso rose Wednesday as investors positioned ahead of the Bangko Sentral ng Pilipinas’ policy-setting meeting on Aug 17.
The Philippine Stock Exchange index jumped 74.18 points, or 1.17 percent, to close at 6,410.09, while the broader all-shares index rose 25.54 points to 3,426.41.
“The local market bucked the negative performance of most Asian stock indices and brushed aside jitters on Chinese economy and the direction of US monetary policy,” China Bank Capital managing director Juan Paolo Colet said.
Colet said, however, the uptick in the market was mostly a technical rebound, and investors should still be wary about possible selloff.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the continued growth in overseas Filipino remittances and rise in vehicle sales also boosted the market.
The peso gained Wednesday to close at 56.52 against the US dollar from 56.84 Tuesday.
Meanwhile, Asian markets fell Wednesday on concerns about the Chinese economy and after stronger-than-expected US retail sales data increased the likelihood of a further Fed rate hike.
The bounce in July sales, boosted by online spending, showed that consumption has proven more robust than expected, even as the US economy cools.
Comments by Minneapolis Fed president Neel Kashkari also added to concerns that the US central bank is not yet done with rate hikes in its battle to tame inflation.
While inflation may be moving in the right direction, it is still higher than the Federal Reserve would like and it is too early to declare victory, said Kashkari, a member of the Fed’s interest-rate-setting committee.
“I’m not ready to say that we’re done, but I’m seeing positive signs,” Kashkari told a conference in Minneapolis on Tuesday.
The central banker said he would need to see “convincing evidence” that inflation is coming down to the Fed’s 2.0 percent target and that the central bank was a “long way” from cutting rates.
Minutes from the Fed’s July policy meeting are due to be released later Wednesday which investors will be scouring for insight on the bank’s interest rate outlook.
US stocks retreated on rate concerns and fresh worries over the banking sector after an analyst at ratings agency Fitch warned of the risks of a banking industry downgrade.
The Dow fell 1.0 percent while the broad-based S&P 500 dropped 1.2 percent and the tech-rich Nasdaq Composite Index declined by 1.1 percent.
The overnight declines on Wall Street added to the risk-off sentiment in Asia, with data showing a further fall in Chinese new home prices in July adding to concerns about the world’s second-largest economy, which has stumbled since emerging from its pandemic isolation.
Asian markets were well in the red, with Tokyo, Hong Kong, Seoul and Sydney all down more than 1.0 percent.
Shanghai, Taipei, Singapore, Bangkok and Jakarta also retreated, while Manila was the sole gainer and Kuala Lumpur was flat.
The red ink spilled over to Europe, where London and Frankfurt were both down 0.2 percent in opening trade while Paris was off 0.1 percent.
“Most Asian stocks experienced declines due to further deteriorating economic conditions in China. These concerns were exacerbated by resurfacing anxieties about a more aggressive stance from the US Federal Reserve, causing a wholesale lack of interest in high-risk assets,” said Stephen Innes of SPI Asset Management.
Figures released Wednesday by China’s National Bureau of Statistics showed new home prices declined for a second month in July in a further indication of the problems facing the deeply indebted property sector and the wider economy.
The data comes on top of a raft of weaker-than-expected figures on Tuesday showing slowing growth in retail sales and industrial production.
Several banks slashed their growth forecasts for China following the data, with JPMorgan Chase cutting its estimate for 2023 to 4.8 percent, well below a May forecast of 6.4 percent, Bloomberg reported. Barclays also cut its estimate to 4.5 percent.
The recent data suggests China may struggle to achieve its official five percent growth target set for the year.
The economy grew just 0.8 percent between the first and second quarters of 2023, according to official figures. With AFP