February 9, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Stocks rise on positive sentiment, Fed bets

SHARES rose on Tuesday, breaking a three-day losing streak as investors remained optimistic on the Philippines’ outlook even as inflation hit a 14-year high last month and amid expectations of smaller rate hikes from the US Federal Reserve.

The Philippine Stock Exchange Index (PSEi) rose 232.25 points, or 3.6%, to close at 6,674.38 on Tuesday, while the broader all-shares index rose 73.79 points, or 2.16%, to 3,477.72 rose.

“A strong rebound in the PSE index today, signaling a shift in market sentiment from bearish to bullish even as the inflation rate has risen to 8%,” said Jeff Radley C. See, head trader at Mercantile Securities Corp., in a Viber message on Tuesday.

Headline inflation was 8% in November, the fastest pace in 14 years. This was faster than the 7.7% in October and the 3.7% in the same month last year and was also the fastest headline print since November 2008’s 9.1%.

Inflation averaged 5.6% for the first 11 months, compared to 4% in the same period a year ago. That’s still below the central bank’s full-year forecast of 5.8%, but well above its 2022 target of 2-4%.

“[There] There were no concerns because inflation hit 8%, which was above Bloomberg’s most recent median estimate,” Luis A. Limlingan, director of sales at Regina Capital Development Corp., said in a Viber message.

“Investors shrugged off concerns that the Fed will have to hike rates longer than previously expected to bring inflation down after better-than-expected November services data from the Institute for Supply Management… Although the market, by and large, still expects The Fed will hike rates again by 50 basis points at its December meeting,” added Mr. Limlingan.

US manufacturing activity rose to 61.1 in November from 60.8 in October, Reuters reported. A score above 50 indicates an expansion in the country’s manufacturing activity, which accounts for 12% of the US economy.

At home, all sector indices closed higher on Tuesday. Holding companies added 268.79 points, or 4.34%, to close at 6,450.05; Real estate rose 118.56 points, or 4.18%, to 2,954.65; Financials jumped 51.13 points, or 3.14%, to 1,675.99; Mining & Oil was up 147 points, or 1.43%, to 10,422.91; Services rose 21.55 points, or 1.3%, to 1,677.76; and Industrials rose 111.03 points, or 1.18%, to 9,471.07.

The promoted teams outnumbered the relegated teams, 100 to 81, while 46 names closed unchanged.

Value turnover rose to 6.04 billion pesos on Tuesday, with 582.78 million shares changing hands, from 5.64 billion pesos with 514.23 million issues traded on Monday.

Foreigners became buyers on Tuesday with net purchases of P270.44 million versus P687.43 million in net sales the previous trading day.

Mercantile Securities’ Mr. See estimated PSEi’s support at 6,400-6,550 and resistance at 6,870-7,000. — JID table at Reuters