Stocks up slightly; Converge, AREIT rise

Stocks rose slightly Thursday as investors weigh foreign developments after the Federal Reserve said it will start tapering its pandemic support program this month.

The Philippine Stock Exchange Index added 19 points, or 0.3 percent, to 7,203.72 on a value turnover of P7.7 billion. Losers, however, beat gainers, 123 to 80, with 42 issues unchanged.

Fiber broadband services provider Converge ICT Solutions Inc. rallied 4.6 percent to P33, while AREIT Inc., the real estate investment trust company of major property developer Ayala Land Inc., climbed 4.8 percent to P47.15.

Jollibee Foods Corp., the biggest fast-food chain, gained 2.6 percent at P238, but grocery chain AllDay Marts Inc. of the Villar Group fell 17.8 percent to P0.74 on profit taking.

The rest of Asian markets rose Thursday to track another record on Wall Street after the Federal Reserve said it would be patient in hiking interest rates as the economy continues to recover.

The announcement brought to an end months of speculation about the bank’s plan for the bond-buying program, and removed some unease among traders who were concerned that officials were leaving it too late to respond to rocketing inflation.

And the upbeat mood filtered through to Asia, with Tokyo up almost one percent as it reopened after a one-day break, while Hong Kong, Shanghai, Sydney, Seoul, Mumbai, Bangkok and Jakarta also rallied.

The Fed is the latest bank to move away from its emergency measures and it comes after rate hikes in several countries including Canada and South Korea, while the Bank of England is expected to follow suit later in the day.

It also makes the Fed the latest monetary authority to begin winding back the measures put in place at the start of the pandemic which have been crucial to the global rebound and an 18-month equity rally to multi-year or record highs.

Policymakers had said at the outset that they would only start tapering when they were satisfied the world’s number one economy was well on the recovery track with unemployment under control and inflation running hot for an extended period.

Inflation has been surging for months, while jobs creation continues to scorch along, albeit with the rare blip—reinforced by data Wednesday showing private businesses hired far more people than expected in October.

However, while bank boss Jerome Powell was pleased with the economic recovery, he said he wanted to see the labor market heal more before hiking interest rates from record lows, telling reporters: “We think we can be patient.”

The expectation is still for borrowing costs to rise in the middle of next year, soon after the bond-buying has come to an end.

“I don’t think we are behind the curve. I believe policy is well-positioned to address the range of plausible outcomes,” Powell said.

Still, the bank must tread a careful path as it contends with global supply chain snarls, rising commodity prices, surging wage costs and rocketing demand, all against the ever-present backdrop of the COVID pandemic.

The announcement helped Wall Street’s main indexes reverse early losses to surge to new record highs for a fourth straight day. With AFP