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Thursday, November 30, 2023

Market closes flat; BDO, Ayala issues top gainers

Stocks closed nearly flat Thursday on mild bargain hunting after slumping the other day as the US Federal Reserve Board signaled further interest rate hikes.

The Philippine Stock Exchange Index added just 4.63 points, or 0.007 percent, to 6,588.28 on a value turnover of P5 billion. Losers beat gainers, 96 to 87, with 46 issues unchanged.

Conglomerate Ayala Corp. of the Ayala Group advanced 4.4 percent to P733, while unit BPI, the third-biggest lender in terms of assets, rose 1.3 percent to P96.15.

BDO Unibank Inc. of the Sy Group, largest bank, climbed 1.3 percent to P130.50, but sister unit SM Prime Holdings Inc. declined 3.7 percent to P36.45.

Investors further unloaded equities in the rest of Asia on Thursday as they girded themselves for more interest rate hikes aimed at quelling runaway inflation, with some analysts warning that markets could retest the lows touched in June.

Data showing prices rose at a record clip in the eurozone in August reinforced fears that central banks have a long road to run before they win their battle, which has fanned warnings of a recession in the world’s leading economies.

Another drop on Wall Street came as Treasury yields—a key gauge of future interest rates—rose further as a broadly healthy report on US private jobs showed there was still plenty of wiggle room for the Fed to continue tightening monetary policy.

The downbeat mood in New York and Europe, which is also being buffeted by a major energy crisis, spread to Asia.

Tokyo, Hong Kong, Sydney, Seoul, Mumbai, Bangkok and Taipei were all deep in the red, though Singapore, Wellington and Jakarta eked out small gains.

Shanghai gave up an early advance following news that the Chinese city of Chengdu would effectively lock down around 16 million people in a bid to contain a COVID-19 outbreak, likely dealing another blow to an already stuttering economy.

Meanwhile, another top Fed official signaled the bank was determined to keep lifting borrowing costs, mirroring comments by head Jerome Powell last week that there would be no let-up in the fight against inflation.

“My current view is that it will be necessary to move the Fed funds rate up to somewhat above four percent by early next year and hold it there,” said Cleveland Fed President Loretta Mester in remarks prepared ahead of an event for the Dayton Area Chamber of Commerce.

“I do not anticipate the Fed cutting the Fed funds rate target next year.”

Interest rates are currently at 2.25-2.5 percent, and there is a growing expectation they will be hiked by a bumper 75 basis points for a third successive meeting later this month.

A government jobs report Friday will be closely watched by traders hoping for an idea about the next move by the bank, which has said it will make its decision based on data.

In a further warning that policymakers had a win-at-all-costs mentality, Mester later told the audience: “Even if the economy were to go into a recession, we have to get inflation down.”

The hawkish remarks out of the Fed have dealt a hefty blow to a rally in markets from their June lows.

And some have warned that more pain could be on the way, with Frances Stacy, of Optimal Capital Advisors, telling Bloomberg Radio: “I don’t think we’ve seen the bottom for this year.” With AFP

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