The Philippine peso climbed Friday to breach the 55-a-dollar level, while local stocks ended the first week of September in the green despite worries about health of the US economy.
The peso closed at 55.90 against the greenback, up from 56.21 on Thursday amid rising optimism on the local economy and following the release of inflation data showing a deceleration in consumer price movement.
Data from the Philippine Statistics Authority showed that inflation softened to 3.3 percent in August from 4.4 percent in July, raising the possibility of interest rate cuts by the Bangko Sentral ng Pilipinas later this year.
The 30-company Philippine Stock Exchange index also gained 28.12 points, or 0.41 percent, to close at 6,936.09, while the all-shares index ended at 3,752.86, up by 13.59 points or 0.36 percent.
Regina Capital Development Corp. head of sales Luis Limlingan said Philippine equities managed to eke gains as investors continued to cheer the inflation data.
Metropolitan Bank and Trust Co. chief economist Nicholas Mapa said the 3.3 percent August inflation could mean that the door for the Bangko Sentral ng Pilipinas to cut rates remains open.
Metrobank Research expects the central bank to deliver two more rate cuts before year-end.
Limlingan said, however, US stocks dropped overnight as investors grew wary of the US economic outlook ahead of Friday’s labor report.
“Private payrolls showed their weakest growth since 2021, while jobless claims fell, raising questions about the Federal Reserve’s next move,” Limlingan said.
Holding firms rose 0.96 percent, while financials and property advanced by 0.89 percent and 0.87 percent, respectively. Services declined by 0.82 percent, while mining and oil slipped by 0.15 percent.
Value turnover climbed to P5.853 billion, with gainers edging decliners, 93 to 90, while 57 shares were unchanged.
Asian markets fluctuated Friday as traders positioned themselves ahead of a highly anticipated US jobs report later in the day and after a mixed bag of economic data on the world’s top economy.
As a rollercoaster week drew to a close, debate centers on the Federal Reserve’s plans for interest rates when it meets in less than a fortnight, with most observers expecting a 25-basis-point cut.
However, analysts say it could go twice as big if the non-farm payrolls report for August comes in well below forecasts, as a series of recent figures suggest the economy is slowing more sharply than initially thought.
A big miss in July’s reading fanned fears of a recession and was a key driver of the rout across markets at the start of last month.
Investors were given a slight jolt by data Thursday showing a miss on private-sector hiring, which was slightly offset by a dip in first-time and continuing claims for jobless benefits.
A separate report pointed to a marginal increase in activity in the key services sector, which beat expectations.
“There has been nothing in the latest batch of US economic data… to materially impact on expectations for (Friday’s) all-important employment data or to move the dial on expectations for what the Fed is likely to do on September 18,” said National Australia Bank’s Ray Attrill.
Wall Street ended the day on a tepid note, and Asian investors were equally cautious.
Shanghai, Seoul, Mumbai and Wellington fell along with London, Paris and Frankfurt.
Tokyo was weighed by a strong yen, which has picked up against the dollar on the back of bets on a Fed rate cut and growing expectations the Bank of Japan will continue hiking its own borrowing costs.
Still, Sydney, Singapore, Taipei, Jakarta and Bangkok rose. Hong Kong was closed due to a typhoon.
The broadly calm end to the week came after markets were sent tanking Wednesday following a disappointing read on factory activity and worries about tech firms’ valuations — particularly chip giant Nvidia — after a rally this year.
Analysts warned there was a lot of risk in Friday’s jobs figures, with a sharp drop likely to boost bets on a 50-point cut but stoke fresh recession worries, while an above-forecast read would dent hopes for a series of cuts this year.
Traders have factored in one percentage point’s worth of reductions before the end of the year.
“One thing is becoming increasingly evident: the more the market leans into the idea of a 50 basis point cut, the shakier equities get,” said Stephen Innes in his Dark Side Of The Boom newsletter.
“This week’s relentless market slide is a reflection of mounting fears that a 50 basis point cut isn’t a soft cushion but rather a red flag signaling turbulent economic waters ahead.” With AFP
