Stocks rally; DITO, BDO lead gainers

The stock market rallied Wednesday along with the rest of Asia, tracking a strong performance on Wall Street as Federal Reserve chief Jerome Powell said he was determined to rein in runaway inflation but pledged to maintain the healthy recovery in the world’s top economy.

The Philippine Stock Exchange Index jumped 129.44 points, or 1.8 percent, to 7,215.13 on a value turnover of P5.9 billion. Gainers overwhelmed losers, 133 to 49, with 50 issues unchanged.

DITO CME Holdings Corp., the third-biggest mobile phone player, surged 9.2 percent to P5.37, while Solar Philippines Nueva Ecija Corp., which is building what is touted to be the biggest solar farm in Southeast Asia, climbed 6.8 percent to P1.42.

BDO Unibank Inc., the largest lender in terms of assets, rose 3.5 percent to P126.80, while Metropolitan Bank & Trust Co., the second-biggest bank, advanced 3.4 percent to P57.70.

The rest of Asian and European equities also rose Wednesday.

Global markets have endured a torrid start to the year after minutes from the bank’s December meeting revealed a hawkish tilt by officials spooked by months of stubbornly high price rises that many fear could hit consumers and ruin the growth rebound.

They showed policymakers wanted to speed up their cycle of monetary tightening, including multiple interest rate hikesÅ\some commentators saying four this yearÅ\and the shrinking of the bond holdings on its balance sheet, which help keep lending rates down.

Traders have been worried by the prospect of an end to the ultra-loose policies, which have helped power a two-year market rally and support the pandemic-hit economy.

But Powell managed to soothe some of those fears Tuesday during his Senate reconfirmation hearing.

He said the economy was on a strong footing, and with inflation rising and employment recovering, “the economy no longer needs or wants the very highly accommodative policy.”

Wall Street cheered, with Nasdaq climbing more than one percent, having taken a severe hit recently as tech firms are more susceptible to higher borrowing rates.

The gains extended into Asia, with Hong Kong up 2.8 percent, thanks to a boost in tech firms, and Tokyo up a little shy of two percent.

Seoul was also up more than one percent, while Shanghai, Sydney, Taipei, Mumbai and Bangkok were up. London, Paris and Frankfurt were all well up at the open.

Inflation was “very near the top of the list” of risks to the economic outlook, Powell said, adding that the current rate is “very far above target.”

Prices are currently rising at their fastest pace in four decades owing to a number of pressures including surging wage growth, supply chain snarls and high energy costs.

The Fed expects a “return to normal supply conditions” in the coming months, Powell said, but “if we see inflation persisting at high levels longer than expected… we will use our tools to get inflation back.”

The comments were taken by traders to be less hardline than feared, suggesting recent fears about a swift removal of easy-money measures may have been overdone. With AFP