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Friday, March 29, 2024

Stock market rallies; SMIC up

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Stocks rallied Tuesday after the government announced that inflation rate settled at a 42-month low in October and on renewed optimism over US-China trade talks.

The Philippines Stock Exchange index, the 30-company benchmark, jumped 157 points, or 1.95 percent, to close at 8,216.68.  It was also up 10 percent since the start of the year.

The broader index, representing all shares, went up 55 points, or 1.1 percent, to settle at 4,887.37 on a value turnover of P9.5 billion.  Losers edged gainers, 95 to 94, while 54 issues were unchanged.

SM Investments Corp., the holding company of the Sy family, climbed 6.4 percent to P1,091 while unit SM Prime Holdings Inc. gained 2.8 percent to P40.60.  Bank of the Philippine Islands rose 2.8 percent to P100.

Meanwhile, other Asian markets also rose Tuesday, tracking a record lead from Wall Street as trade optimism was given another lift by a report saying the US was considering cutting some tariffs on Chinese goods.

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The rally built on Monday’s advance with global equities buoyed by expectations the economic superpowers are close to a mini trade deal, strong earnings and lower interest rates.

A forecast-busting US jobs report on Friday and signs the American economy is stabilizing added to the upbeat mood.

The Financial Times said Tuesday that the White House is considering dropping existing tariffs on more than $100 billion of imports in a bid to seal the deal with China.

It cited unnamed sources as saying officials were looking at rolling back levies on a range of imports including clothing, appliances, and flatscreen monitors, which have been subject to 15 percent rates since September 1.

The US has imposed duties on Chinese goods worth hundreds of billions and the removal of some of these is said to be a key demand of Beijing in any trade agreement.

Meanwhile, a Bloomberg News article said Chinese officials were considering locations in the United States that Xi Jinping and Donald Trump could hold a signing ceremony as early as this month.

Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA, said: “It could be interpreted as the US blinking first as the presidential impeachment hearings gather momentum, and we approach the holiday season and then an election year.”

AxiTrader senior market analyst Stephen Innes said that while shares have enjoyed a long run on the back of the trade deal hopes, investors appeared willing to press on with their buying for now.

“The question is whether the market has now priced in the… phase one trade deal,” he said in a note.

“And for the time being it appears, risk markets are in benefit-of-the-doubt mode, preferring to look through any fragility in macro data, while applying a higher weight to comments on trade,” Innes said.

Tokyo led gainers as it reopened after a long weekend to play catch-up with Monday’s rally.

The Nikkei ended 1.8 percent higher, while Shanghai rose 0.5 percent, Sydney added 0.2 percent and Singapore put on 0.4 percent. Seoul climbed 0.6 percent, while Taipei rallied 0.8 percent.

Hong Kong rose 0.4 percent as investors there brushed off data showing a key measure of business confidence fell to its lowest level in more than a decade as the city reels from global trade woes and violent democracy protests. With AFP

The Purchasing Managers Index—which measures the health of the private sector—dropped to 39.3 in October, its worst reading since 2008 during the global financial crisis, heaping fresh misery on the unrest-plagued city.

The reading is well below the 50 level that separates growth from contraction and is also sharply down from the 41.5 seen in September.

Bernard Aw, principal economist at IHS Markit, said: “Anecdotal evidence revealed that the retail and tourism sectors remained particularly affected.” With AFP

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