The stock market surged Tuesday on falling crude prices, fanning hopes that inflation rates across the globe could begin to come down.
The Philippine Stock Exchange Index advanced 112.80 points, or 1.7 percent, to over three-month high of 6,850.64 on a value turnover of P8.9 billion. Gainers beat losers, 111 to 91, with 35 issues unchanged.
Security Bank Corp., the eighth-biggest lender in terms of assets, jumped 5.8 percent to P92, while BDO Unibank Inc. of the Sy Group, the largest bank, climbed 4.5 percent to P125.40.
Fiber broadband provider Converge ICT Solutions Inc. rose 4.9 percent to P19.40, while major property developer Ayala Land Inc. of the Ayala Group gained 3.8 percent at P30.20. Emperador Inc. of business tycoon Andrew Tan, the biggest liquor producer, advanced 3.2 percent to P19.56
Meanwhile, oil prices extended losses Tuesday after below-par US and Chinese data reinforced recession expectations, while equities were mixed as traders debate whether the data will allow central banks to temper their interest rate hikes.
But while Asia built on Wall Street’s upbeat performance in the morning, some markets were unable to maintain momentum.
Shanghai edged up with Sydney, Seoul, Mumbai, Jakarta, Bangkok and Wellington, while Tokyo and Taipei were barely moved. Hong Kong sank more than one percent and Singapore was also down.
Wall Street provided a strong lead as tech firms were supported by bets that the Federal Reserve will not lift borrowing costs by 75 basis points for a third straight meeting next month.
Both main crude contracts dropped again, having lost around three percent the day before, as demand expectations are lowered in light of a string of soft economic indicators in major economies.
Signs that Iran is moving towards a nuclear deal added to the downward pressure on prices, with an agreement seen as allowing the country to restart oil sales into the world market.
Analysts said Tehran could provide 2.5 million barrels a day, giving a much needed shot in the arm to supplies, which have been hammered by sanctions on Russia in response to its invasion of Ukraine.
Libya has also boosted production, helping prices drop to six-month lows and wiping out the gains seen after the Ukraine war started.
But analysts warned that there might still be some way to go on an Iran agreement, owing to upcoming US elections.
“A deal with Iran would likely not be popular with US voters and so is hard to envisage before the November mid-terms,” said National Australia Bank’s Ray Attrill.
“Markets are currently prone to optimism, though, and hopes for a deal… have added to downward pressure on oil prices.”
With surging oil prices a key driver of inflation to multi-decade highs around the world, the drop has fanned hopes that the headline figure could begin to come down.
That has led to speculation that central bank chiefs could lift rates at a slower pace, and then think about pivoting monetary policy to cuts as early as next year.
The prospect of a less painful hiking campaign has sparked a rally in equities from their June lows. With AFP