Market climbs; Ayala issues lead rally

The stock market rallied Wednesday on another set of positive data supporting the Philippines’ economic recovery.

The Philippine Stock Exchange Index surged 92.82 points, or 1.4 percent, to 6,902.54 on a value turnover of P7.6 billion. Gainers overwhelmed losers, 138 to 61, with 52 issues unchanged.

April exports and imports both sustained growth, increasing 72.1 percent and 140.9 percent, respectively, as world economies reopen and the rollout of COVID-19 vaccine accelerates, data from the Philippine Statistics Authority on Wednesday show.

Conglomerate Ayala Corp. advanced 4.2 percent to P835, while property unit Ayala Land Inc. rose 3.6 percent to P38.30.

Jollibee Foods Corp., the biggest fast-food chain, climbed 3.3 percent to P205, while BDO Unibank Inc. of the Sy Group, the largest lender in terms of assets, gained 3.2 percent at P110.30.

The rest of Asian investors, meanwhile, trod cautiously Wednesday with focus on the release of US inflation data this week, which could have a huge bearing on Federal Reserve monetary policy, while the European Central Bank’s latest meeting is also in view.

Global markets have essentially been in a holding position this month as traders try to determine the outlook for central banks’ policies in light of the surging economic recovery, with concerns that a spike in prices will force them to taper ultra-loose monetary programs.

After a tepid lead from Wall Street, Asian markets mostly fell. Tokyo, Hong Kong, Sydney, Singapore, Seoul, Mumbai and Taipei slipped, though Shanghai, Wellington and Jakarta edged up.

Officials continue to pledge that any sharp rise in inflation will only be temporary and they will maintain their accommodative position until the economy is well on the recovery track, but investors remain susceptible to data.

That makes Thursday’s consumer price index (CPI) figures crucial, observers say, with anything above the 4.7-percent forecast likely to ramp up expectations the Fed will tighten policy earlier than expected.

“The tight trading ranges seen so far this month reflect the cautious mood in the market ahead of the inflation numbers,” said Fiona Cincotta of City Index.

“Whilst   the Fed reassures that this spike in inflation is temporary, policy makers will need to be out in their droves to calm the market.”

Thursday also sees the ECB’s decision on policy, with analysts not expecting any changes yet but looking for any shifts in its outlook as the recovery presses ahead.

“It’s an opportune time for a thorough review given the improved state of both the economy and the vaccination rollout, factors that are so closely intertwined and now working more clearly for the positive,” said National Australia Bank analyst David de Garis.

“While there’s no denying the better run of data and generally at or better than expected economic outcomes, prudence around the pandemic, including from variants, also argues for a degree of policy caution with a still very accommodating stance of monetary policy.” With AFP