Stocks rose Thursday along with the rest of Asian markets, after the US Federal Reserve played down chances of a huge interest rate hike in the near future.
The Philippine Stock Exchange Index climbed 66.19 points, or 1 percent, to 6,868.92 on a value turnover of P5.7 billion. Gainers overwhelmed losers, 140 to 59, with 37 issues unchanged.
Globe Telecom Inc. of the Ayala Group, the second-biggest telecommunications firm, surged 7.5 percent to P2,388, while fiber broadband provider Converge ICT Solutions Inc. advanced 6.4 percent to P30.
PLDT Inc. of the Indonesia’s Salim Group, the largest telecom company, gained 2.3 percent at P1,932, while SM Investments Corp. of the Sy Group added 1.4 percent to P861.
The rest of Asian markets rallied Thursday, while oil extended gains as the European Union moved to ban imports from Russia.
US central bank officials announced an expected half-point lift in borrowing costs—the biggest since 2000—as part of its battle to rein in inflation, while unveiling a timetable to offload its vast bond holdings.
However, traders were given some much-needed cheer when Fed boss Jerome Powell said a 75 basis-point rise, which had been flagged by many observers, was not “not something the committee is actively considering.”
While he flagged more 50-point hikes to come, the news fueled a rally on Wall Street, where all three main indexes piled on around three percent thanks to a surge in tech firms, which are most susceptible to higher rates.
“This was a reflection of relief, as investors came into the meeting fearful that the committee would be overly aggressive in tightening monetary policy,” said Clara Cheong of JP Morgan Asset Management.
She added that if inflation began showing signs of slowing, it could allow the Fed to be less aggressive as it treads a fine line between containing prices and nurturing the post-pandemic economic recovery.
“It remains to be seen if the Fed can pull off this fine balancing act and orchestrate a soft landing, but for now we believe that the US economy is in a strong enough position to weather higher rates,” Cheong said.
“There is still, however, a risk that an overly aggressive approach can run the risk of tipping the economy into a mild recession in 2023.”
The gains in New York filtered through to Asia, where Sydney, Taipei, Mumbai, Bangkok and Wellington rose. However, Hong Kong and Singapore dipped after giving up early gains.
Shanghai advanced after returning from a long break, though sentiment was dealt a blow by data showing activity in China’s services sector fell to the lowest level since the outset of the pandemic.
The news reinforced the view that China’s strict zero-COVID measures were hammering the world’s number two economy.
“Removing some of the uncertainty is helpful in getting some of the cash that has been on the sideline back into the markets, whether it’s bonds or equities,” Erin Gibbs, of Main Street Asset Management, told Bloomberg Television.
The Fed hike was the latest in a series of steps by central banks around the world to contain inflation and came ahead of an expected lift by the Bank of England later Thursday. With AFP