Stocks rise; Converge, AC Energy advance

The stock market rose Tuesday on improving economic prospects and government moves to ease restrictions on business activities and mobility.

The Philippine Stock Exchange Index gained 46.50 points, or 0.6 percent, at 7,266.31 on a value turnover of P8.5 billion. Gainers beat losers, 105 to 90, with 51 issues unchanged.

Fiber broadband service provider Converge ICT Solutions Inc. jumped 10.7 percent to P31, while AC Energy Corp. of the Ayala Group surged 10 percent to P11.88.

Basic Energy Corp. soared 21.7 percent to P0.73 after disclosing a plan to buy up to 60 percent of Filoil Energy Company Inc., while SM Investments Corp. of the Sy Group climbed 3.9 percent to P1,008.

The rest of Asian markets advanced Tuesday, extending a Wall Street rally as optimism over corporate earnings provided some respite from long-running worries about inflation, central bank tightening and signs of a slowing economic recovery.

A string of forecast-beating profit reports from businesses over the past week has provided a much-needed boost to investors who have for most of the year been waiting nervously for finance chiefs to start winding in the vast cash support put in place at the start of the COVID-19 pandemic.

The positive readings have eased concerns about the impact on companies’ bottom lines from surging inflation, a brewing energy crisis and expectations that the era of cheap money will soon come to an end.

“Thus far we’ve seen companies post some fairly decent beats on the earnings front, and while it’s been notable that most have cited concerns about rising costs, as well as supply chain disruptions, we haven’t seen many significant profit downgrades yet,” said CMC Markets analyst Michael Hewson.

The S&P 500 and Nasdaq on Wall Street ended in positive territory, and Asia followed suit.

Hong Kong and Taipei put on more than one percent each, while Shanghai, Tokyo, Seoul, Singapore, Wellington and Mumbai also saw healthy gains. However, Sydney, Bangkok and Jakarta slipped.

Investors brushed off reports that North Korea had fired an unidentified projectile into the sea.

While attention is largely on the release of profit reports, traders are also awaiting comments from the US Federal Reserve as it prepares to scale back its vast bond-buying program with an eye on surging prices.

The bank has already signaled a start to the taper before the end of the year but observers are now pricing in the possibility of an interest rate hike in mid-2022, much earlier than had originally been envisaged.

“The world is watching interest rates more closely than it has for some time,” said Chris Weston at Pepperstone Financial, adding that it was “impressive how resilient and calm markets are in the face of the rates repricing”.

Analysts said Hong Kong was enjoying a break from selling—it has lost more than five percent this year—as China shows signs of slowing its crackdown on private enterprises such as tech firms that are listed in the city.

They added that concerns about China’s growth, which has been stunted by a regulatory drive against the property sector, could also be a factor in leaders stepping back from further measures. With AFP