Stocks advanced Monday following the lead of other Asian markets and building on the momentum of gains in the United States and Europe at the end of last week, as investors price in the expectation of further interest rate hikes aimed at taming inflation.
The Philippine Stock Exchange index, the 30-company benchmark, climbed by 109 points, or 1.7 percent, to close at 6,715.75.
The broader all-share index also picked up 39 points, or 1.1 percent, to settle at 3,545.82 on a value turnover of P4.3 billion.
Gainers led losers, 113 to 79, while 52 issues were unchanged. Nine of the 10 most active stocks ended in the green, led by Ayala Land Inc. which rose 4.9 percent to P29.15. SM Investments Corp. went up 2.3 percent to P885, while Bank of the Philippine Islands added 2.2 percent to close at P98.25.
Meanwhile, equities in Japan, Australia, Singapore, Taiwan and Jakarta also surged, while markets in Hong Kong, China and South Korea were closed for a public holiday.
London, Paris and Frankfurt also opened higher on Monday.
The euro continued to gain against the dollar, with investors in Europe weighing the prospect of the European Central Bank following the US Federal Reserve’s lead and raising key rates.
On Sunday, German central bank president Joachim Nagel signalled the ECB would probably continue raising rates to curb runaway inflation.
Nagel predicted inflation in Europe might peak at more than 10 percent in December.
The ECB raised the key rate by a historic 75 basis points last week, and markets expect a similar-sized hike at an October meeting.
This week, investors worldwide will be closely watching US inflation data for August, due to be released on Tuesday, with the consumer price index (CPI) expected to ease slightly to eight percent — still well above the Fed’s two-percent target.
Traders expect the Fed to impose another large rate hike next week, after two 75-basis-point increases already.
“A downside surprise in US CPI is likely more of a concern and that could see the dollar weakening further,” Charu Chanana, a strategist at Saxo Capital Markets, told Bloomberg Television.
Clifford Bennett, chief economist at ACY Securities, said he expected stocks to “continue to drift higher” ahead of Tuesday’s US CPI data.
“[US CPI] may well see further improvement as petrol prices have continued to pull back,” he said.
“Other components are still likely to be pointing higher, but fuel prices could well dominate this CPI number.”
Oil began the week with a slump, as investors weigh the possibility of global demand weakening as growth slows and China’s harsh zero-Covid policy continues to sap economic activity.
On Monday, new data showed British GDP expanded by 0.2 percent in July, according to the Office for National Statistics.
Concerns remain, however, about the overall health of the UK economy.
“July’s GDP remains below the level seen in May, pointing to an overall contraction over the first two months of summer,” said Yael Selfin, chief economist at KPMG UK. With AFP