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PH stocks climb on expectations of moderate January inflation rate

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Philippine stocks rose Monday ahead of the release of January inflation which is expected to be slower than 3.9 percent in December.

The bellwether Philippine Stock Exchange index added 20.97 points, or 0.31 percent, to close at 6,728.22, while the broader all-shares index climbed 8.32 points, or 0.24 percent, to finish at 3,525.12.

“The Philippine shares were bought up  to start the week as investors brace for a fresh batch of economic data, followed by earnings releases. Tomorrow, the Philippine January inflation will be released, with many expecting this to further moderate from the previous month,” Regina Capital Development Corp. head of sales Luis Limlingan said.

Total value turnover reached P3.86 billion.

Economists expect inflation to settle within the target range of 2 percent to 4 percent.

“While we are mindful of inflation risk, particularly with rising rice prices, we expect the inflation rate in first quarter to benefit from base effects and to print around 3 percent to 4 percent,” said Jean de Castro, head of fixed income at Manulife Investment Management and Trust Corp.

Castro said while the tight monetary policy, base effects and the government’s tariff extension under Executive Order 50 should keep inflation within BSP’s target range in the quarter, upside risks include rising global oil and rice prices and the effect of increases in minimum wage implemented last year.

Meanwhile, Asian markets were mixed Monday after a forecast-busting US jobs report and comments by Federal Reserve boss Jerome Powell shattered any remaining hopes for a March interest rate cut.

Decision-makers left traders disappointed last week when they said after a meeting that they were unlikely to loosen policy at their next gathering.

There were still some rumblings of a change in view if the non-farm payrolls data came in below expectations, but they were soon extinguished Friday by the highest reading in a year, while December’s figure was ramped up.

The figures showed the labor market and world’s biggest economy remained robust despite borrowing costs sitting at two-decade highs, giving little room to the Fed to cut even as inflation comes down.

That was followed by the airing Sunday of an interview with Powell in which he said the bank wanted to see more data.

The “danger of moving too soon is that the job’s not quite done, and that the really good readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading”, he said according to a transcript from CBS.

“The prudent thing to do is to… just give it some time and see that the data continue to confirm that inflation is moving down to two percent in a sustainable way,” he said in the interview, which was conducted before the jobs report was released.

The chances of a March reduction plunged to 20 percent after the reading, down from around 40 percent Thursday, according to Bloomberg News. They had been about 80 percent at the start of the year.

“Initially, markets were anticipating six cuts starting in March,” said Stephen Innes at SPI Asset Management.

“However, Powell’s recent remarks suggest such an early move was improbable. Combined with a robust January jobs report, hopes of an early spring adjustment have moved from improbable to impossible.”

And Yardeni Research President Ed Yardeni added that officials would likely continue to push back against market speculation for five cuts before the end of the year.

Still, Wall Street ended Friday with more big gains for all three main indexes, pushing the S&P 500 to a fresh record thanks to a rally in tech giants Meta and Amazon in the wake of strong earnings.

The advance in New York was fueled by optimism that the economy is not likely to fall into recession, while rates are also still expected to come down.

Most of Asia struggled again, however, with Hong Kong and Shanghai extending a sell-off fueled by growing concerns about the Chinese economy.

Investors were unmoved by pledges from officials Sunday to prevent wild fluctuations in stocks, with the China Securities Regulatory Commission vowing to guide more medium- and long-term funds into the market.

They provided few concrete plans, and observers said the move was unlikely to help turn sentiment around.

“The statement sought to stabilize investor sentiment, but didn’t touch on fundamental problems including a lack of confidence and huge economic uncertainty,” Shen Meng, at investment bank Chanson & Co, said.

“Those issues are the causes of abnormal market fluctuation. “Observers, however, said the market may be about to bounce back after a long-running sell-off.

“Whether or not today marks the floor to Chinese equities is yet to be seen but it sure feels as though we’re bumping along the bottom as policymakers have signaled they no longer want to see any further declines,” said Invesco Asset Management’s David Chao.

There were also losses in Sydney, Seoul, Singapore, Jakarta and Wellington.

Tokyo rose as the dollar rallied against the yen to boost exporters.

The greenback surged Friday in reaction to the jobs data, which ramped up Treasury yields on the prospect of interest rates staying higher for longer.

Mumbai, Manila and Bangkok edged up, while London, Paris and Frankfurt opened higher. With AFP


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