Local stocks edged higher Monday as investors await cues on US inflation and interest rates.
The 30-company Philippine Stock Exchange index rose 10.80 points, or 0.17 percent, to close at 6,233.74, while the broader all-shares index picked up 3.22 points to settle at 3,363.45.
Regina Capital Development Corp. head of sales Luis Limlingan said the local shares went up as investors wait for fresh batch of economic data that could affect price activity this week.
Overseas investors anticipate the release of US August inflation rate, producer price index and retail sales.
“Three straight months of gains in crude oil prices, stronger-than-expected services sector and lower jobless claims are fueling expectations for inflate to come in higher,” Limlingan said.
Investors in the Philippines also monitor the release of foreign direct investments.
Meanwhile, most Asian markets advanced Monday as investors turn their attention to a key US inflation report later in the week, hoping for a reading that will ease concerns about the Federal Reserve’s interest rate plans.
After a slow start Asian traders turned more positive through the day and tracked last week’s gains on Wall Street, with data showing a pick-up in Chinese inflation giving a lift to sentiment. With few catalysts to drive activity, Wednesday’s US consumer price index figures are a focal point, particularly as the Fed has insisted its future rate decisions would be driven by data.
Traders have been in retreat over the past week after a string of readings suggested the economy and labor market remained resilient despite more than a year of monetary tightening.
That has revived talk that the central bank could lift rates again before the end of the year or keep them elevated for an extended period.
The bank policy board is due to meet next week, while the European Central Bank will announce its decision on Thursday.
“The data remains indicative of the fact that even if the Fed were to pause in September, they would potentially not close the doors to further tightening,” said Saxo Group’s Redmond Wong.
Hong Kong dipped, but pared hefty morning losses, as it played catch-up with a regional retreat Friday, when the city was shut down by a heavy storm.
Tokyo, Taipei, Bangkok and Wellington also fell.
But Shanghai, Sydney, Seoul, Singapore, Mumbai, Manila and Jakarta were all in positive territory, along with London, Paris and Frankfurt.
Traders took heart from news that China’s consumer price index rebounded in August, having contracted the month before. While the 0.1 percent rise was less than expected, it gave traders some hope that the economy is slowly on the mend after a painful 2023 so far.
US Treasury Secretary Janet Yellen looked to calm worries that the long-running rate hikes would cause a recession in the world’s top economy, saying she was optimistic it was on course for a soft landing.
“I am feeling very good about that prediction,” she said Sunday. “I think you’d have to say we’re on a path that looks exactly like that.”
She added: “Every measure of inflation is on the road down.”
On currency markets, the yen picked up after sinking last week to a 10-month low against the dollar, with support coming from comments seen as hawkish by Bank of Japan boss Kazuo Ueda.
He told the Yomiuri newspaper that policymakers would have a better idea later in the year about wage rises, a key data point for rate decisions.
The yen has tumbled around 10 percent owing to the BoJ’s refusal to move away from its ultra-loose monetary policy, even as the Fed pushed borrowing costs to a two-decade high.
“In this economic cycle, major G10 central banks have typically begun raising interest rates when core inflation has risen by two percentage points above their inflation target,” said Stephen Innes at SPI Asset Management.
“Japan finds itself precisely at that juncture. Reflecting on past experiences, many central banks tightened their monetary policies too late, initially viewing inflation increases as transitory.
“Therefore, the prevailing risks seem to lean toward the possibility of the BoJ taking further tightening measures within the next six months.”
The yuan also bounced from a 16-year low against the dollar after the People’s Bank of China said it would crack down on speculation that distorts the value of the currency after months of volatility. With AFP