Stocks rose and the peso slightly gained Friday in line with the movement of other markets in the region despite expectations for more big Federal Reserve rate hikes.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, picked up 9 points, or 0.2 percent, to close at 5,904.75 as four of the six subsectors advanced.
The broader all-share index went up 12 points, or 0.4 percent, to settle at 3,177.74 on a value turnover of P4.65 billion.
Gainers outnumbered losers, 115 to 70, while 40 issues were unchanged.
Five of the 10 most active stocks ended in the green, led by Ayala Land Inc. which climbed 3.1 percent to P23.50 and Semirara Mining and Power Corp. which added 3.1 percent to close at P40.50.
The peso recovered slightly to close at 58.94 against the US dollar on trading volume of $542 million Friday from a record low of 59 a dollar Thursday.
Meanwhile, the sterling held on to its big gains sparked by speculation the UK government was set to perform another U-turn on its debt-fueled mini-budget, though the yen remained stuck around three-decade lows against the dollar.
The hotly awaited US inflation report showed prices rose last month at a faster clip than expected despite a series of interest rate increases this year, which have fanned fears of a global recession.
The month-on-month reading came in double estimates, while core inflation—which strips out volatile energy and food prices—was also elevated.
The figures sparked a sharp plunge on Wall Street but the selling quickly reversed, and all three main indexes finished the day with gains of more than two percent with analysts suggesting several reasons for the extreme move.
Some said the initial selling may have been a knee-jerk reaction before traders accepted the data was not as bad as other recent reports, while technical factors were also flagged.
Others speculated that equities had finally reached their bottom after a year of selling that has seen many indexes plunge into correction territory having lost more than 20 percent from their recent peaks.
“The market reversal was a head-scratcher”, said OANDA’s Edward Moya. “Some investors are convinced core inflation will soon start trending lower. Fed tightening will remain aggressive at 75 basis points in November and possibly December,” he added.
“Monetary policy is quickly getting restrictive and that will undoubtedly send inflation lower. It looks like rates will peak slightly above five percent and for some that is good enough of a reason to get back into stocks.”
However, he warned that “given the path for rates is higher, this market reversal won’t last long”.
Tokyo piled on more than three percent, while Hong Kong, Seoul, Taipei, and Mumbai added more than two percent. There were also big gains in Sydney, Singapore, and Wellington.
London, Paris, and Frankfurt jumped at the open, extending Thursday’s gains.
There was little reaction to news that Chinese consumer inflation had hit a two-year high partly because of surging pork prices, though Shanghai was well up ahead of the start of a key Communist Party gathering at which Xi Jinping is expected to be named president for a third term.
The pound held up after breaking higher Thursday on reports the new government could row back on more tax-cut pledges in its mini-budget, which sparked market turmoil when released two weeks ago.
Sterling sat above $1.13, with help also coming from Bank of England cash injections to prop up financial markets.
The pound’s stronger position came despite Prime Minister Liz Truss’s insistence that there would be no more U-turns, after she was previously forced to scrap a plan to cut the higher rate of income tax.
Finance minister Kwasi Kwarteng has returned early from Washington for an International Monetary Fund meeting to address the crisis.
While the BoE has said it intends to end its markets support Friday, analysts say will likely keep an eye on events.
“There is… an expectation that whatever the Bank of England and Governor (Andrew) Bailey says about ending the support for the gilt market today if we get further turbulence next week, they will have little choice but to step in and provide liquidity to the market,” said CMC Markets’ Michael Hewson. With AFP