Philippine stocks rallied Thursday to close above 6,600 level on expectations the US June inflation rate slowed down, which boosted hopes of a possible rate cut.
The bellwether Philippine Stock Exchange index surged 119.89 points, or 1.85 percent, to close at 6,609.24, while the wider all-shares index added 45.64 points, or 1.30 percent, to finish at 3,555.68.
“The local index rose strongly with Asian markets on the back of a record rally in US stocks, fueled by bets that June inflation data will reinforce expectations of Federal Reserve interest rate cuts starting in September,” China Bank Capital managing director Juan Paolo Colet said.
The US June inflation rate is slated for release on Friday.
Colet said trading was also boosted by broadening consensus that the Bangko Sentral ng Pilipinas would start monetary policy easing in August.
All indices ended in the green, with holding firms increasing 2.35 percent, followed by industrial (1.85 percent) and property (1.67 percent).
Value turnover reached P5.5 billion with 117 advancers, outnumbering 68 decliners, while 60 stocks were unchanged.
Meanwhile, Asian and European stocks on Thursday tagged along with a Wall Street rally that saw another round of record highs as bets on a September interest rate hike surged following comments by Federal Reserve boss Jerome Powell.
The advances also saw Hong Kong and Shanghai push higher after struggling in recent weeks over worries about the Chinese economy, with investors awaiting a key Communist Party meeting next week.
On a second day of testimony to lawmakers, Powell said decision-makers would not wait until inflation had hit the bank’s two percent target before loosening monetary policy, adding: “If you waited that long, you’ve probably waited too long.”
His remarks came before the release of the latest consumer price index reading on Thursday, which is expected to show a further slowdown.
Traders ramped up bets on the Fed reducing borrowing costs in two months’ time, with analysts saying Powell was telegraphing to markets that the decision had been made.
The comments soothed recent fears among investors that officials might keep rates at their two-decade high for some time owing to a still strong labour market and inflation staying stubbornly above two percent.
The S&P 500 ended with a sixth straight record, while the Nasdaq also finished at an all-time peak.
And the upbeat mood filtered through to Asia, where Hong Kong jumped two percent, while Tokyo, Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei, Manila, Bangkok and Wellington also rose.
London rose in the morning as data showed the UK economy grew last month at a faster pace than expected. Paris and Frankfurt also advanced.
Eyes are also turning to the start of China’s Third Plenum gathering on Monday, where top officials including President Xi Jinping are expected to discuss ways to kickstart the world’s number two economy in the face of an ongoing property crisis and geopolitical issues.
However, while there is hope for some sort of major policy announcement, commentators remain cautious.
Andrew Batson, of Beijing-based consultancy Gavekal Dragonomics, told AFP he did not expect a “fundamental departure from the course Xi has already laid out”, in which technological self-sufficiency and national security outweigh economic growth.
Nomura’s Ting Lu added that the meeting was “intended to generate and discuss big, long-term ideas and structural reforms instead of making short-term policy adjustments”.
Economic growth in the first quarter of the year came in above forecasts and is tipped to top the government’s five percent goal for April-June, but the meeting comes amid ongoing concerns that officials are not providing enough support.
Taylor Nugent at National Australia Bank warned: “Further monetary policy easing is constrained by a reluctance to allow further depreciation in the renminbi, and expectations are low for any big policy shift at the Third Plenum.” With AFP
