Stocks rose Monday, the first day of “floorless” trading in the Philippines, following a strong performance on Wall Street as speculation that inflation may have peaked tempered expectations about central bank interest rate hikes.
The Philippine Stock Exchange index, the 30-company benchmark, gained 21 points, or 0.3 percent, to close at 6,238.82.
The broader all-share index also picked up 14 points, or 0.4 percent, to settle at 3.352.47 on a value turnover of P5.24 billion.
Gainers outnumbered losers, 98 to 84, while 54 issues were unchanged.
Seven of the 10 most active stocks ended in the green, led by Solar Philippines Nueva Ecija Corp. which climbed 7.1 percent to P1.65 and Universal Robina Corp. which advanced 6.5 percent to P101.50.
Monday marked the start of PSE’s fully-digital trading operations after closing its trading floor at PSE Tower in Fort Bonifacio, Taguig City.
Meanwhile, Asian and European markets rallied on Monday, building on last week’s advances. With prices surging at a pace not seen in a generation, finance chiefs have been forced to lift borrowing costs and wind back their ultra-loose monetary policies in recent months, sending a chill across trading floors.
But a string of weak data has led many investors to believe that inflation may have plateaued or is about to, giving room for banks to be less hawkish.
The prospect that rates will not go as high as initially expected helped send Wall Street stocks higher Friday, with the S&P 500 and Nasdaq ending up more than three percent.
And Asia continued last week’s rally.
Hong Kong led gainers, climbing more than two percent thanks to a strong performance in Chinese tech firms. Indications that China’s crackdown on the sector could be coming to an end added to the upbeat mood in the city.
Tokyo, Shanghai, Seoul, Singapore, Sydney, Bangkok, Mumbai and Wellington were also well up.
London, Paris and Frankfurt were all up in early trade.
“Market conviction that perhaps the Fed won’t now hike rates as aggressively as previously feared and/or that rate cuts before the end of 2023 are now an even more realistic prospect if recession-like conditions lay ahead, have had a big hand in last week’s improvement in risk sentiment,” said National Australia Bank’s Ray Attrill.
He added that the rally had helped pare about two-thirds of the losses suffered in a painful sell-off from June 9 to 16. With AFP
While Fed chiefs continue to flag further big interest rate hikes in the pipeline, expectations for a prolonged period of increases have waned, which has in turn taken some heat out of the dollar.
Bitcoin has also won some support, after falling to as low as $17,600 last week for the first time since December 2020.
“There’s a feeling that things aren’t as bad as we thought they were going to be,” Carol Pepper, of Pepper International, told Bloomberg Radio.
“There’s a hope that perhaps we’ve oversold, perhaps there’s not going to be a recession,” she said.
But others warned that while the markets were enjoying a moment of calm, they were not out of the woods yet.
“Over the last week, equity markets have snapped back from oversold territory, which brought a sense of relief to investors,” said Bank of Singapore’s Eli Lee.
“It is unsurprising in bear markets to see relief rallies, which can be unpredictable in magnitude and duration. However, we continue to see a fragile environment for risk assets over the next 12 months.”
Traders are keeping an eye on the G7 summit in Germany, which is set to be dominated by Russia’s war in Ukraine.
The leaders agreed money collected from higher trade tariffs imposed on Russian exports should be funneled as aid to Ukraine, the White House said. With AFP