Stocks bounced back Thursday tracking a strong performance on Wall Street as the US central bank move signaled it is intent on fighting runaway prices.
The Philippine Stock Exchange Index advanced 73.59 points, or 1.2 percent, to 6,393.01 on a value turnover of P5.6 billion. Losers, however, edged gainers, 107 to 103, while 48 issues were unchanged.
SM Prime Holdings Inc. of the Sy Group, the biggest operator of shopping malls, climbed 3.8 percent to P37.90, while Aboitiz Equity Ventures Inc. of the Aboitiz Group rose 3.7 percent to P50.
Bank of the Philippine Islands of the Ayala Group, the third-largest lender in terms of assets, increased 3.4 percent to P96, while Universal Robina Corp. of the Gokongwei Group, the biggest snack food maker, advanced 3 percent to P96.80.
The rest of Asian equity markets, meanwhile, mostly fell Thursday and the dollar advanced as an early rally fueled by a “dovish” Federal Reserve interest rate hike gave way to the prospect of an extended period of tight monetary policy.
The 0.75 percentage point increase—the biggest in nearly 28 years—had been expected after data Friday showed inflation at its highest since 1981, as the Ukraine war supply chain snarls sent energy and food costs spiraling.
Powell said it was “essential” to lower inflation, and policymakers “have both the tools we need and the resolve it will take to restore price stability on behalf of American families.”
He stressed that the goal is to achieve that without derailing the US economy but acknowledged there was always a risk of going too far.
In his post-meeting news conference, he told reporters the move was “an unusually large one” but he did not expect “moves of this size to be common.”
While the lift was bigger than the 50 basis points flagged before Friday’s figures, it was welcomed as a sign the Fed was on the case and helped push down Treasury yields—a key guide to future rate expectations.
The 75 basis points hike “is a solid showing that will, all else being equal, serve to improve Fed credibility and leave monetary policy slightly less behind the inflationary curve,” said BMO Capital Markets strategists Benjamin Jeffery and Ian Lyngen.
However, after chasing higher in the first few hours of the day, Asia lost momentum in the afternoon.
Tokyo, Singapore, Seoul, Wellington and Jakarta held up, but Shanghai, Sydney, Taipei, Mumbai and Bangkok were all in negative territory. With AFP
Hong Kong led the losses after a big gain Wednesday and as investors there contemplated a sharp rate hike in the city owing to its monetary policy link to the United States.
European markets tumbled in the morning, with London traders awaiting a Bank of England policy meeting that is expected to see it hike rates for a fifth straight time.
“Powell must be pretty pleased with his press conference and the market reaction as he delivered what I would interpret as a ‘dovish’ 75 basis point hike,” said SPI Asset Management’s Stephen Innes.
But he added: “The Fed now needs the data to play along for the ride and inflation to not surprise on the upside again. If it does, 75 basis points for July and September will be quickly repriced.” With AFP