Stocks rebounded Monday, fueled by optimism over China’s reopening and on hopes the US Federal Reserve will slow its pace of interest rate hikes.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, jumped 122 points, or 1.83 percent, to close at 6,790.24, as all six subsectors advanced, led by mining and oil. It was also up 3.41 percent since the start of the year.
The broader all-share index also went up by 55 points, or 1.59 percent, to settle at 3,568.97 on a value turnover of P6.40 billion. Gainers outnumbered losers, 148 to 47, while 43 issues were unchanged.
Nine of the 10 most active stocks ended in the green, led by Bank of the Philippine Islands which climbed 5.37 percent to P106.00 and Ayala Corp. which rose 4.09 percent to P712.00.
Most Asian markets also rose, tracking the gains on Wall Street. All three main indexes in New York soared more than two percent Friday after a closely watched report showed a forecast-busting rise in new jobs but a slowdown in wages growth.
That came as separate figures showed a shock contraction in the crucial services sector — the first since spring 2020 at the height of the pandemic.
The readings, while suggesting the world’s top economy was showing signs of weakness, were seized on by traders hopeful that the Fed will begin to temper its monetary tightening campaign.
Investors are now betting officials will lift borrowing costs about 25 basis points at their next meeting at the end of the month.
However, policymakers have warned that rates will continue to go up as they aim to bring decades-high inflation under control, with some saying they will not likely be cut until 2024.
In a further sign of hope, data Friday showed eurozone inflation slowed for a second month in a row in December, to 9.2 percent — the first time in single digits since September.
“If Friday’s price action tells us anything it’s that investors really want to believe the peak inflation narrative that has helped support the rebound in equity markets that we’ve seen so far this year,” said CMC Markets analyst Michael Hewson.
Asian equities started the day on the front foot, with Hong Kong sharply higher and Shanghai also well up.
Traders in the two cities have been on a high at the start of the year as they welcome China’s emergence from zero-Covid as well as pledges to help the struggling economy, particularly the property sector.
The borders between Hong Kong, Macau and China were partially opened Sunday, providing a much-needed boost to the city. Macau-based casinos surged on the move.
“The U-turn in China’s Covid policy is consequential to growth and equity returns,” said SPI Asset Management’s Stephen Innes.
“So with the lifting of border restrictions between China/Hong Kong/Macau and international travel reopening, local travelers are not only in a celebratory mood but also investors.”
Sydney, Seoul, Singapore, Taipei, Mumbai, Bangkok and Wellington also enjoyed a strong start to the week. Tokyo was closed for a holiday.
Easing expectations about US rates were also weighing on the dollar, which extended Friday’s retreat against its major peers.
Oil prices rose, having plunged around eight percent last week on demand concerns caused by a spike in Covid infections in China as containment measures are lifted.
However, while the commodity is now at more than a one-year low, observers say it could rally again as China reopens and the global economy recovers.
“I think oil will go upwards of $140 a barrel once Asia fully reopens, assuming there will be no more lockdowns,” said hedge fund manager Pierre Andurand. He added that the “market is underestimating the scale of the demand boost that it will bring”. With AFP