Stocks surged Friday after a bumper session on Wall Street as lower US inflation dimmed expectations of more aggressive Federal Reserve rate hikes.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, jumped 119 points, or 1.9 percent, to close at 6,286.77 as all six subsectors advanced.
The broader all-share index also picked up 51 points, or 1.6 percent, to settle at 3,328.89 on a volume turnover of P4.9 billion. Gainers outnumbered losers, 125 to 58, while 40 issues were unchanged.
All ten most active stocks ended in the green, led by SM Investments Corp. which climbed 4.8 percent to P825.00, and SM Prime Holdings Inc. which gained 3.2 percent to P35.00. Semirara Mining and Power Corp. added 3.2 percent to finish at P30.70.
The peso also appreciated to a near two-month high against the US dollar following reports the inflation rate in the world’s biggest economy eased to 7.7 percent in October from 8.2 percent in September.
The peso gained P0.96, or 1 percent, to close at 57.23 against the greenback, up from 58.19 on Thursday. It was the local currency’s strongest level since it settled at 57.16 on Sept. 15, 2022. Total volume reached $820.15 million, up from $792 million previously.
“The stronger peso today [was] largely due to the sharp decline in the US dollar against major global currencies after the lower-than-expected US inflation data,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in an SMS to Manila Standard.
Ricafort said the financial markets had reduced and moderated their estimate for additional Fed rate hikes in view of the easing US inflation data.
The peso on Wednesday returned to the 57 territory amid expectations that the Bangko Sentral ng Pilipinas would increase by 75 basis points the policy rate in its meeting next week.
Meanwhile, Asian markets also traded higher Friday. Hong Kong stocks rocketed 6 percent at the open while Tokyo’s key Nikkei index also surged, closing up almost 3 percent.
The gains extended global rallies after the US consumer price index showed that the annual pace of inflation was a lower-than-expected 7.7 percent in October, down from 8.2 percent in September.
As US residents reel from sky-high costs, the central bank has moved forcefully to lower demand by raising the benchmark lending rate six times this year.
The latest inflation data should be welcome news to Fed policymakers, because prices are “finally showing some response” to the steep rate hikes, said Rubeela Farooqi of High Frequency Economics.
“Inflation has finally started to drop like a rock in the US and this is the best news that anyone can expect,” said AvaTrade analyst Naeem Aslam.
The dollar slumped against rival currencies following the data release, and shares rallied as investors cheered the prospect of less hawkish moves by the central bank.
The Dow was up 3.7 at the close and the tech-heavy Nasdaq index soared 7.4 percent, while European markets also ended higher.
Most Asian markets matched the upbeat mood.
Taipei jumped 3.7 percent, Seoul was up 3.4 percent and Sydney climbed 2.8 percent. Singapore rose 1.7 percent, Shanghai was up 1.7 percent and Mumbai put on 1.9 percent.
“As expected, buying in Asia tech is standing out this morning,” Stephen Innes of SPI Asset Management said.
“But with investors still looking over their shoulders at the crypto schism and rising Covid cases in China, that tide that was lifting all boats is starting to recede in places,” he said. With AFP