The Philippine Stock Exchange index is expected to test the 7,000 level this week, after the market entered the bull territory on Friday.
A bull market means that stock prices sustained an increase of more than 20 percent from the recent lows. The PSEi, the 30-company benchmark, climbed 22 percent to 6,951.54 as of Jan. 13 from 5,699.30 on Oct. 3, 2022.
Analysts said investors sentiment turned positive after the Bangko Sentral ng Pilipinas signaled an imminent end to its monetary tightening cycle.
The reopening of China and the strengthening of the peso against the dollar also contributed to general optimism, as these factors would help boost the domestic economy and corporate earnings.
The peso closed at 54.89 against the dollar Friday, stronger than 55.29 on Thursday.
“Market sentiment leans toward optimism as the Bangko Sentral ng Pilipinas noted that the pressure to match the US Federal Reserve’s increases will be much lower,” online brokerage firm UTrade Inc. research analyst Neil Andrew Maderaje said.
Maderaje said the lower US Consumer Price Index in December also raised hopes that central banks could once again slow interest rate hikes on their policy meetings through the year.
First Metro Investments Corp. head of research Cristina Ulang said the local market would likely hit 7,500 this year amid the reopening of China and return of foreign funds.
The PSEi jumped 4.25 percent last week to close at 6,951.54. The broader all-share index also advanced by 3.55 percent to settle at 3,637.62.
Global stocks mostly rose Friday, extending a positive start to 2023, as Wall Street shrugged off early loses following mixed bank earnings and Europe cheered better-than-expected German economic data.
Major US indices opened the day lower following results from JPMorgan Chase and other large banks that signaled expectations for a “mild” recession this year.
But markets reversed course in the middle of the session, a sign “the weakness was seen as a buying opportunity,” said Briefing.com analyst Patrick O’Hare, who noted the bank forecasts did not imply a deep downturn.
The market is “reasonably confident we’re not going to see the worst-case scenario of a hard landing,” O’Hare added.
The broad-based S&P 500 finished at 3,999.09, up 0.4 percent for the day and gaining 2.7 percent for the week.
The bounce in New York came on the heels of a positive day at European bourses.
Government data showed the German economy grew a better-than-expected 1.9 percent last year as government relief measures cushioned Europe’s export giant from an energy crisis triggered by war in Ukraine.
Analysts and the government have been predicting that Europe’s largest economy will fall into recession this year, but the GDP figures―and a string of recent indicators―suggest it may dodge a severe downturn.
“Through decisive actions in the past year, we made the crisis manageable,” German Economy Minister Robert Habeck said in response to the growth data.
“In a short space of time, we pushed through legislative packages and mobilized large sums of money to support the economy and unburden consumers,” he added.
Shares in London closed 0.6 percent higher, while in Paris they rose 0.7 percent and in Frankfurt 0.2 percent.
The gains followed a buoyant session Thursday after a report showed that US consumer inflation fell in December to the lowest level in over a year — rising 6.5 percent from a year ago, the smallest increase since October 2021.
That bolstered bets that the Federal Reserve would lift interest rates by just 0.25 percentage points next month, easing worries about a possible recession for the world’s largest economy.
Most Asian markets tracked Thursday’s New York rally, lifted also by optimism over China’s reopening from the pandemic, though Tokyo shares dropped as a strong yen fanned fears that major exporters could suffer.
Shanghai, Sydney, Seoul, Mumbai, Singapore, Jakarta, Taipei and Wellington were all in the green.
Hong Kong also extended its winning streak despite a report saying the Chinese government was considering taking “golden shares” in giants Alibaba and Tencent, giving it a tighter grip on the tech sector.
Meanwhile, oil prices rose for a seventh straight session on optimism about China’s reopening after lengthy Covid-19 restrictions. With AFP