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Saturday, December 9, 2023

Stock market rebounds, ends 5-day losing streak

Philippine stocks rebounded Wednesday from a five-day losing streak following overnight gains on Wall Street on the back of strong third-quarter corporate earnings.

The Philippine Stock Exchange index rose 14.78 points or 0.25 percent, to close at 6.054.50, while the broader all-shares index inched up by 4.14 points or 0.13 percent, to settle at 3,299.83.

Losers outnumbered gainers, 830 to 81, while 51 issues were unchanged on value turnover of P3.6 billion.

Four of the 10 most active stocks ended in the green, led by Metropolitan Bank & Trust Company which climbed 2.97 percent to P53.70 and PLDT Inc. which added 2.57 percent to finish at P1,235.00.

Regina Capital and Development Corp. head of sales Luis Limlingan said the US stocks went up after the latest corporate earnings of S&P 500 companies exceeded market expectations.

Investor sentiment in the Philippines, however, was dampened by hawkish comments from Bangko Sentral ng Pilipinas Governor Eli Remolona.

Remolona said Tuesday an off-cycle rate hike could be on the table as early as Thursday this week amid the rising inflationary pressures.

Most Asian markets rose Wednesday after China unveiled plans for $137 billion in extra debt to boost infrastructure spending, while oil extended losses on hopes that Israel will scale back its plans for a Gaza ground invasion.

Traders tracked a rally on Wall Street that was helped by a strong set of earnings from big-name firms including Coca-Cola, Verizon and 3M that fueled optimism for the reporting season.

Still, geopolitical crises continue to cast a shadow, with a broader Middle East war still possible and many fearing it could send crude and inflation soaring.

After another painful start to the week, Hong Kong led gains Wednesday after China approved a plan to issue 1 trillion yuan ($137 billion) in sovereign bonds to be distributed to local governments to support national disaster prevention and recovery.

The move will lift the fiscal deficit ratio for 2023 to about 3.8 percent of gross domestic product, the official Xinhua news agency said Tuesday, above the three percent usually considered Beijing’s limit.

Leaders rarely alter the budget mid-year, but it did happen in 2008 after the Sichuan earthquake and during the Asian financial crisis in the late 1990s.

Bloomberg News reported that President Xi Jinping paid his first known visit to the central bank, indicating the increased focus the government is putting on the economy.

“The landing of the surprising policy despite surprising third-quarter (economic growth) data may be due to policymakers’ acknowledgement that the pressure to stabilize growth next year will increase,” said Shenwan Hongyuan Group analysts.

The announcement follows a series of small, targeted measures aimed at lifting the economy, which has struggled to recover from the impact of years of zero-Covid measures.

It also comes after officials came under pressure for a bigger, wider-ranging spending pledge similar to that seen during the global financial crisis.

“This is not the bazooka, but one of the most significant incremental moves so far,” Societe Generale Cross Asset Research wrote in a note.

Hong Kong, Shanghai, Tokyo, Taipei, Manila, Jakarta and Bangkok all rose, though Seoul, Singapore, Mumbai and Wellington dipped.

There were also losses in London, Paris and Frankfurt.

Traders remained aware that the crisis in the Middle East could spiral at any minute as Israel presses on with a bombing campaign of Gaza after Hamas’ deadly attacks.

According to Israeli authorities, more than 1,400 people were killed when Hamas gunmen stormed across the border from Gaza on October 7. In retaliation, Israel began a relentless bombardment that has killed almost 5,800 people, according to the Hamas government’s Ministry of Health.

Iran—which has warned of a pre-emptive strike on Israel—has recently activated regional militias, fanning fears of a conflagration, while Israel has also issued broadsides against Hezbollah militants in Lebanon.

However, while Israel has built up a huge force on the Gaza border, it has yet to move into the territory, giving observers hope that leaders are recalibrating their plans for wiping out Hamas.

That optimism has weighed on oil prices, which sank two percent Tuesday, and extended losses in Asian trade.

“Given the global political pressure, not to mention two US aircraft carrier strike groups prowling the Mediterranean, providing the ultimate ‘iron dome’, perhaps cooler heads will eventually prevail in the region,” said SPI Asset Management’s Stephen Innes.

“But the crux of the matter is that there has been no interruption in the Middle East’s oil supply.” With AFP

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