The stock market rallied Tuesday after government data showed inflation may be nearing its peak, reducing pressure on the Bangko Sentral ng Pilipinas to increase further the benchmark interest rates.
The Philippine Stock Exchange Index jumped 106.15 points, or 1.4 percent, to 7,685.76 on a value turnover of P5.4 billion. Gainers beat losers, 112 to 84, with 53 issues unchanged.
The inflation rate in May inched up to 4.6 percent from 4.5 percent. Bangko Sentral ng Pilipinas Gov. Nestor Espenilla Jr. said Tuesday there were signs that “inflation is slowing and may be close to peak.”
SB Equities Inc. noted that the month-on-month inflation surprisingly was flat in May from 0.5 percent in April and way below the January-April average of 0.7 percent.
ING Bank Manila senior economist Joey Cuyegkeng said the May inflation reduced pressure on the Bangko Sentral to hike policy rate later this month but uncertain second-round effects would keep the central bank vigilant.
“… We believe that recent developments would mean that inflation is at or near the peak. These developments also cut the pressure on BSP to hike policy rates this month. However, we still expect BSP to hike policy rates at the June 21 meeting to pre-empt second-round effects and stabilize inflation expectations,” Cuyegkeng said.
Now Corp., which is bidding to become the country’s third major telecommunications company, surged 10.3 percent to P10.82, while Universal Robina Corp., the biggest snack food maker, rebounded 4.1 percent to P125.80.
SM Investments Corp. of retail tycoon Henry Sy advanced 3.8 percent to P912.50, while International Container Terminal Services Inc., the largest port operator, climbed 2.9 percent to P87.50.
Most Asian markets also rose on Tuesday, extending recent gains as analysts said optimism over the improving US economy was helping overcome worries about a possible trade war and geopolitical uncertainty.
Tokyo and Hong Kong each ended 0.3 percent higher, while Shanghai climbed 0.7 percent. Seoul and Singapore were each 0.3 percent higher, while Wellington and Jakarta also rose.
But Sydney slipped 0.5 percent, while Taipei and Bangkok dropped.
US investors provided another strong lead with the Nasdaq chalking up a new closing high, as Friday’s better-than-expected jobs report continued to provide support despite an expected jump in Federal Reserve interest rates.
Attention this week turns to the Group of Seven summit that begins Friday in Quebec, where Donald Trump is expected to face criticism over his decision to lump tariffs on Canadian, Mexican and European steel and aluminum.
The EU and Canada have filed complaints at the World Trade Organization while China has also issued a warning to Washington not to target its exports.
However, while there are concerns about the impact a trade war would have on the global economy, Stephen Innes, head of Asia-Pacific trade at OANDA said trading floors were broadly upbeat for now.