Stocks slightly rose amid thin trading Monday as investors await the next move by the US Federal Reserve in its bid to fight soaring inflation.
The PSE index, the 30-company benchmark, gained 5 points, or 0.1 percent, to close at 6,585.20, as four of the six subsectors advanced.
The broader all-share index was nearly flat at 3,437.99, on a value turnover of P5.5 billion. Losers outnumbered gainers, 102 to 84, while 52 issues were unchanged.
Three of the 10 most active stocks ended in the green, led by BDO Unibank Inc. which climbed 3 percent to P110.70, and Jollibee Foods Corp. which rose 2.2 percent to P242.00. SM Investments Corp. finished 0.7 percent higher at P936.00.
Asian markets dropped and the dollar edged up Monday after a forecast-beating US inflation reading dampened hopes for a more dovish tilt by the Federal Reserve in its battle against soaring prices.
The producer price index reading for November followed data showing the jobs market remained tight, suggesting the central bank would likely need to keep hiking interest rates.
Meanwhile, investors are now looking to the release later in the day of key consumer price index figures, which comes ahead of the Fed’s next policy meeting.
A below-forecast print for October’s CPI sparked a rally on markets last month as investors bet on a shorter pace of rate hikes, though concerns about a recession continue to weigh on sentiment.
“An ominous feeling is consuming markets ahead of this week’s crucial CPI report and [Fed policy] meeting,” said Stephen Innes at SPI Asset Management.
“While headline inflation continues to drop, the top-side beat on PPI expectations suggests that while inflation might climb down the mountain, the slope remains very uncertain.”
Policy decisions in the United Kingdom, the European Union, and several other economies are also due this week.
All three main indexes on Wall Street fell Friday, and Asia followed suit.
Hong Kong led the way down—hedding more than two percent—having surged last week, while Tokyo, Shanghai, Sydney, Seoul, Taipei, Jakarta, and Wellington were also in the red.
The dollar extended Friday’s gains against most of its peers, having surged for much of the year owing to the Fed’s sharp rate hikes.
Chris Weston, at Pepperstone Group, added that should core consumer prices go above 6.3 percent “then the US dollar should rally hard, and equity should find decent sellers”.
“Conversely, a read below six percent would be a surprise and the US dollar bears should find comfort in that.”
Investors are also keeping an eye on developments in China as it moves away from the zero-Covid policy that has hammered its economy, the world’s second-largest.
The shift comes after widespread protests against the near three-year strategy, though there is concern about the expected spike in infections.
“One official was quoted as saying the mortality rate from Omicron is around 0.1 percent, similar to the common flu and that most people recover within 7-10 days,” said National Australia Bank’s Tapas Strickland.
“The change in language continues the tentative pivot from China over the past few weeks, both in rhetoric around the virus, and also in the easing of restrictions.” With AFP