Market up; Bloombery, ICTSI gain

The stock market extended its rally Tuesday along with the rest of Asia, as long-running optimism over the re-opening of economies overcame early profit-taking to extend a rally across world markets.

The Philippine Stock Exchange Index advanced 69.84 points, or 1.1 percent, to 6,583.84 on a value turnover of P8.5 billion. Gainers beat losers, 135 to 73, with 43 issues unchanged.

Casino operator Bloomberry Resorts Corp. of tycoon Enrique Razon Jr. climbed 6 percent to P8, while affiliate International Container Terminal Services Inc., the biggest port operator, rose 4.9 percent to P107. 

Jollibee Foods Corp., the largest fast-food chain, rallied 4.8 percent to P138.90, while PLDT Inc., the biggest telecommunications firm, added 4.7 percent to P1,194.

Sydney and Hong Kong, meanwhile, were the standout performers, with traders picking up the baton from Wall Street where the Nasdaq ended at a record high and the S&P 500 wiped out all its losses for the year.

There were warnings, however, that the gains—which have seen markets soar from their March trough thanks to the lockdown easing and massive stimulus—may have gone too far, and could be derailed by any number of issues.

Still, for now, the mood is upbeat, with governments slowly removing restrictions that were put in place to stop the spread of COVID-19 but strangled economies and are widely expected to have caused a world recession.

Hong Kong rallied 1.7 percent and Sydney jumped more than two percent as investors there returned from an extended weekend break to play catch-up with Monday’s regional advance.

Shanghai gained 0.6 percent and Taipei added 0.2 percent, while Singapore rallied more than one percent.

Seoul rose 0.2 percent despite geopolitical concerns re-emerging after North Korea said it was severing all official communication links with the South, and Mumbai was up 0.4 percent.

But profit-taking dragged Tokyo 0.4 percent lower and Wellington slipped two percent after racking up gains of more than three percent on Monday.

While traders continue to buy into world markets on hopes the economy will bounce back, analysts urged some caution.

“The good news is that this shows central banks’ effort to stabilize the market have worked,” Tai Hui, at JP Morgan Asset Management, said in a note.

“The more worrying news is that global economic activity is far from where we were before the pandemic. The current risk rally is driven by investors’ belief that the worst of this recession is behind us, which we agree with.”

But he warned: “The road to full recovery is long and will require medical solutions including a widely distributed vaccine or efficient and accurate testing. The threat of a second wave of infections has not been eliminated.”

He added that there were also risks of renewal of the China-US trade war, as well as the impact of mass unemployment and bankruptcies.  

Oil markets remain supported by expectations for a pick-up in demand as lockdowns are eased, as well as huge output cuts by leading producers led by Saudi Arabia and Russia.

However, prices took a knock Monday after  Riyadh said it would not continue beyond this month with additional, voluntary output reductions it had been implementing alongside the main production deal.

AxiCorp’s Stephen Innes suggested the recent run-up in crude over the past few weeks could begin to plateau. With AFP