Philippine stocks rallied on the first trading day of 2024 on expectations that inflation rate would slow down.
The 30-company Philippine Stock Exchange index surged by 104 points, or 1.61 percent, to close at 6,554.04 on Tuesday, while the broader all-shares index advanced by 41.38 points, or 1.21 percent, to 3,465.97.
“The possibility that inflation rate would settle within the 2-4 percent target of the government in December lifted market sentiment,” Philstocks Financial Inc. research analyst Claire Alviar said.
Rizal Commercial Banking Corp. chief economist Michael Rifacort said the market’s run up could still be considered as part of the Santa Claus rally.
He said the local market also caught up with the bigger gains posted by US and other global markets in 2023.
Meanwhile, Asian markets were mixed Tuesday as most traders returned from the New Year break looking forward to a 2024 that is expected to see a series of Federal Reserve interest rate cuts.
After a blockbuster run in the past two months, Wall Street stuttered last week, though analysts are hopeful for another surge as US monetary policy eases.
The next few days will provide fresh insight into the outlook for rates, with the release of minutes from the Fed’s December meeting, followed by jobs creation data.
Indications from the bank that it would cut rates three times next year have lit a fuse under equities with inflation and recession fears giving way to hopes for a strong period ahead.
“There remains an increasing belief that Fed rate cuts, which have bullishly marked all capital market trends in the last eight weeks, are still fully ingrained in stock market sentiment,” said SPI Asset Management’s Stephen Innes.
“While a stronger-than-expected jobs report could shake this conviction, a reversal would require a resurgence in realized inflation, triggering a significantly more assertive hawkish stance from (Fed boss Jerome) Powell and other key figures to discourage March or May rate cuts bets.”
He added that there was a question on how investors would reconcile the difference between market expectations of 150 basis points of cuts and the Fed’s forecast of 75.
Despite the upbeat outlook on rates, Asian markets started the year with little fanfare, with Hong Kong and Shanghai extending their 2023 losses.
Traders were unmoved by a speech by Chinese President Xi Jinping in which he said the economy had become “more resilient and dynamic”.
Observers warned that while Beijing has pledged a series of measures to kickstart growth, much more was needed to instill confidence, particularly regarding the property sector.
There were also losses in Mumbai, Singapore and Taipei, though Sydney, Seoul, Manila, Bangkok and Jakarta rose.
London, Paris and Frankfurt rose at the open.
Tokyo was closed for a holiday, though investors are keeping an eye on developments in Japan a day after a huge earthquake that Prime Minister Fumio Kishida said caused “extensive” damage and numerous casualties.
All tsunami warnings from that quake were lifted on Tuesday.
Oil prices jumped more than one percent after Iran dispatched a warship to the Red Sea in response to the US Navy’s destruction of three Huthi boats.
Tehran’s move comes with tensions still high in the waterway, where the Yemen rebels have launched attacks on several international container ships, causing some firms to stop using it and fueling worries about supplies.
However, a number of shipping companies have resumed transit following efforts by a US-led naval coalition to police the maritime route.
Bitcoin broke $45,000 for the first time since April 2022 on optimism that the United States will give the go-ahead to an exchange-traded fund for the asset. With AFP