Philippine stocks wrapped up the week in the red as investors turned cautious about the slower first-quarter economic growth rate largely due to prevailing high inflation and interest rates.
The 30-company Philippine Stock Exchange index ended the week at 6,511.93, down 30.53 points, or 0.47 percent, while the broader all-shares index dropped 4.42 points, or 0.13 percent, to settle at 3,477.13.
Philstocks Financial Inc. research analyst Claire Alviar said the dismal 5.7-percent first-quarter gross domestic product (GDP) growth, below the government’s target rate of 6 percent to 7 percent, weighed on investor sentiment.
“Given the dismal data, many investors opted to remain on the sidelines as market participation weakened with net turnover registering P3.37 billion,” Alviar said.
Sectoral indices ended mixed, with mining and oil and holding firms registering gains while property, services, financials and industrial recording losses.
Meanwhile, growing hopes that the US Federal Reserve and other central banks are close to cutting interest rates helped push London and Frankfurt to records Friday, while Asian markets also chalked up healthy gains.
Traders tracked gains in New York and Europe as they cheered fresh US data indicating the labour market was beginning to soften, giving central bankers room to ease monetary policy.
The forecast-beating figures showing that unemployment claims rose to their highest level since August followed last Friday’s news that far fewer new posts were created in April than expected.
US Treasury bond yields, a proxy for interest rates, moved lower.
The readings soothed worries that borrowing costs would remain elevated through the year after a series of above-estimate inflation readings in the first four months.
Still, speculation is growing that the Fed will cut rates in September, though analysts urged caution as decision-makers were keen to see evidence that prices are being brought under control.
San Francisco Fed chief Mary Daly said Thursday that while the current policy was keeping a rein on the economy, it could take “more time” for inflation to come down to officials’ two percent target.
“The data is noisy and thus we cannot yet say that a change in trend has occurred, but the next few weeks are going to be important, further increases from here would encourage the market to price a new Fed easing cycle with more confidence,” said National Australia Bank’s Rodrigo Catril.
Earlier Thursday, the Bank of England hinted that it could shift lower in the summer after keeping rates on hold at a 16-year high.
While inflation came in slightly hotter than anticipated, BoE boss Andrew Bailey said he was “optimistic that things are moving in the right direction”.
The European Central Bank is expected to cut its rates in June.
The positive developments saw markets in London and Frankfurt finish at record highs on Thursday.
And with Wall Street enjoying a strong day, Asian investors went into Friday on a high — as did European investors.
Hong Kong continued an impressive run that has seen it enter a bull market after climbing more than 20 percent from its January lows.
The gains were boosted by news that city officials were considering a plan to exempt individuals from paying tax on their dividends from stocks bought via the stock connect with mainland bourses.
There were also gains in Tokyo, Sydney, Seoul, Mumbai, Singapore, Taipei, Wellington and Manila. Shanghai was flat.
London spiked to a new record high as data showed Britain exited a recession with stronger-than-expected growth in the first quarter of 2024.
Frankfurt also hit a new all-time high, while Paris extended its own gains.
Oil prices extended gains as investors tracked developments in the Middle East, with Hamas on Friday saying its team at Gaza ceasefire talks in Cairo had left, adding that the “ball is now completely” in Israel’s hands.
State-linked Egyptian outlet Al-Qahera News reported Thursday that representatives of both camps had left after two days of negotiations aimed at finalizing a ceasefire deal. With AFP
