Third-quarter GDP data boost stock market

Stocks rose Tuesday to hit a new peak this year, bolstered by reports that the Philippine economy grew 7.1 percent in the third quarter, following a revised 12-percent expansion in the second quarter.

The Philippine Stock Exchange index, the 30-company benchmark, gained 45 points, or 0.6 percent, to close at 7,441.67, while the broader all share-index climbed 20 points, or 0.5 percent, to settle at 4,531.86, on a value turnover of P9.5 billion.

Advancers led gainers, 103 to 87, while 48 issues were unchanged.  Eight of the 10 most active stocks ended in the green, led by Jollibee Foods Corp. which advanced 4.5 percent to P259.80 and Globe Telecom Inc. which rose 3.7 percent to P3,422.

Most Asian markets also rose Tuesday following another record on Wall Street, while bitcoin hit a new peak with optimism over the recovery outlook edging out long-running inflation fears, with predictions for even more gains to come.

Traders have been in buoyant mood since the US Federal Reserve last week unveiled its plan for withdrawing its vast financial support but said it would move cautiously in raising interest rates. Analysts said other central banks had been less keen to tighten policy than investors had expected.

Still, the Fed on Monday warned in a closely watched report that the rally across markets could quickly reverse if there was another Covid surge or the recovery stalls, and also raised concerns about the possible impact of China’s property crisis.

All three main indexes in New York hit record highs for the second day in a row helped by news that US lawmakers had passed President Joe Biden’s $1.2 trillion infrastructure overhaul, and as the country reopened to vaccinated visitors from more than 30 countries.

That all came on top of a strong earnings season and after Pfizer’s announcement that a pill to treat Covid had proved to be hugely effective, putting the world another step closer to overcoming the disease.

Markets analyst Louis Navellier said he was very upbeat about the outlook.

“I think that at the end of January, we’re going to be 18 percent to 20 percent higher than we are today,” he said in a note. “That’s a bold statement. But we’ve got a lot of earnings coming out, seasonal strength and an accommodative Fed.”

Asia, which struggled Monday, mostly managed to follow Wall Street’s lead.

Hong Kong, Shanghai, Seoul, Wellington, Taipei, Manila, Bangkok and Jakarta all rose, though Tokyo, Sydney and Singapore edged down. Mumbai was flat.

Bitcoin hit a new record of $68,513 as the combined value of all cryptocurrencies topped $3 trillion, according to data provider CoinGecko.

“This breakout in bitcoin might signal the start of a final push-up for the fourth quarter before the crypto market shows more pronounced consolidation into next year,” Fundstrat said in a technical-strategy report Monday.

“Strength in bitcoin, ethereum and many other altcoins looks likely in the weeks to come.”

Still, the specter of inflation continues to loom large, with prices at multi-year highs owing to supply chain snarls, surging energy costs and a pick-up in demand as the economy returns to normal.

While the Fed has said it will be careful in hiking borrowing costs, Vic Chair Richard Clarida said the economy could be ready for a lift by the end of next year.

“While we are clearly a ways away from considering raising interest rates,” he said he believed the “necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022.”

However, other top Fed officials took a more dovish view on the outlook and the timing of a rate liftoff.

“So, the conclusion is that just like the market, Fed officials are not a hundred percent sure how inflation dynamics will play out,” said Rodrigo Catril at National Australia Bank.

“If price pressures remain elevated, then next year the Fed will be forced to lean against them even if the maximum employment has not yet been reached.”

Eyes are now on the release of US inflation data on Tuesday and Wednesday for a fresh idea about the bank’s plans. With AFP