The stock market surged Thursday as investors breathed a sigh of relief after data showed US inflation finally easing from a four-decade high, giving the Federal Reserve some room to slow down its pace of interest rate hikes.
The Philippine Stock Exchange Index jumped 208.84 points, or 3.2 percent, to 6,680.68 on a value turnover of P8.6 billion. Gainers overwhelmed losers, 144 to 51, with 43 issues unchanged.
Jollibee Foods Corp., the biggest fast-food chain, advanced 6.9 percent to P233, while major property developer Ayala Land Inc. of the Ayala Group climbed 6.4 percent to P28.05.
SM Investments Corp. of the Sy Group rose 4.4 percent to P845, while Aboitiz Equity Ventures Inc. of the Aboitiz Group increased 4.1 percent to P59.70
The rest of Asian markets rallied Thursday.
The below-forecast reading on US consumer prices came on the back of a sharp drop in energy costs and provided a much-needed boost to risk assets across the board.
Wall Street enjoyed a surge that saw the Nasdaq pile on more than two percent and push it into a technical bull market—having spiked more than 20 percent from its June lows—while the dollar dropped against its peers.
And Treasury yields—a gauge of future interest rates—dropped.
Trading floors had been nervous going into Wednesday’s release, as many had feared a forecast-topping figure would beef up pressure on the Fed to announce another bumper rate hike at its September meeting.
Fears that the bank’s monetary tightening drive would send the world’s top economy into recession have dragged markets lower for months, with the mood already darkened by several issues including the Ukraine war, supply chain snarls and worsening China-US relations.
The positive energy from New York filtered through to Asia, where Hong Kong jumped more than two percent, while Shanghai, Sydney, Seoul, Taipei and Jakarta all rose more than one percent. Singapore, Wellington and Mumbai also rose.
But while sentiment was positive, analysts warned against getting over-excited as inflation was still high and would take some time to get under control, while figures on producer prices—which could have a bearing on future CPI readings—will also be closely watched. With AFP
“We still need to see a couple more monthly decreases in underlying inflation before the (Fed) can start to think about pausing its tightening cycle,” Carol Kong, of Commonwealth Bank of Australia, told Bloomberg Television.
“The market is still currently underestimating US inflation and how sticky it will be over the medium term.”
Meanwhile, Fed officials were out trying to temper expectations that they might start reducing borrowing costs as soon as next year.
Minneapolis Fed boss Neel Kashkari warned “we are a long way away from saying that we’re anywhere close to declaring victory,” while Chicago bank boss Charles Evans added rates would continue to rise for “the rest of this year and into next year.”
Investors will be hanging on further comments from policymakers over the next weeks for an idea about the pace of rate hikes, with a still-strong jobs growth showing the economy remained resilient despite higher borrowing costs and inflation. With AFP