Stocks surged Tuesday to end a three-day slump as investors engaged in bargain hunting and after inflation hit a 14-year high of 8 percent that ramped up expectations for a hike in interest rates.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, jumped 232 points, or 3.6 percent to close at 6,674.38 as all six subsectors advanced.
The broader all-share index also picked up 73 points, or 2.2 percent, to settle at 3,477.72 on a value turnover of P6 billion. Gainers outmatched losers, 100 to 81, while 46 shares were unchanged.
Nine of the ten most active stocks ended in the green, led by SM Investments Corp. which went up 5.5 percent to P943.00 and Ayala Corp. which added 5.3 percent to finish at P712.00.
The World Bank on Tuesday raised its gross domestic product growth forecast for the Philippines to 7.2 percent from a previous estimate of 5.7 on higher consumer demand amid the reopening of the economy.
Meanwhile, most Asian and European markets fell Tuesday and the dollar rose as fresh fears that the US Federal Reserve will push interest rates higher than hoped overshadowed growing optimism over China’s economic reopening.
The Philippine economy could expand 7.2 percent in 2022 before slowing down next year, driven by the pent-up demand and the strong performance in the first 3 quarters, according to the Philippines Economic Update (PEU) released by the World Bank on Tuesday.
The economy’s strong performance in the first three quarters was attributed to the easing mobility restrictions that fueled businesses, and government spending.
Meanwhile, the slower growth in 2023 is attributed to reduced consumer demand, high inflation and higher interest rates that are seen to temper household spending and investments.
After a strong start to the week in Asia, traders tracked a big drop on Wall Street that came on the back of data showing a forecast-busting jump in activity in the US services sector last month.
The news—combined with Friday’s bigger-than-expected print on November jobs and wage increases—dented optimism that the Fed’s monetary tightening campaign was finally paying off, which would give it room to take a less hawkish approach into the new year.
Markets had been running higher ahead of the jobs figures after a surprise drop in inflation and comments from Fed boss Jerome Powell that the bank would likely raise rates at a slower pace.
“Outstanding news from the vast services-based US economy is devastating for market participants keen to see evidence of the US economic disintegration,” said SPI Asset Management’s Stephen Innes.
“Coming as it did on the heels of Friday’s jobs report, which indicated that the rumours of the US economic demise were greatly exaggerated, the market immediately moved into ‘good news is bad’ mode, which saw investors ride roughshod over the dovish pivot camp.”
Bets have increased on borrowing costs going higher than five percent next year — from the current 3.75 to 4.0 percent — before the bank pauses, with no cuts seen until 2024.
All three main indexes on Wall Street lost more than one percent and Asia struggled to maintain its recent momentum.
Hong Kong dropped after soaring around 15 percent over the past week on China’s easing of strict Covid containment measures.
Sydney, Seoul, Singapore, Wellington, Mumbai, Bangkok, Taipei and Jakarta were also in the red.
Shanghai was barely moved while Tokyo rose. With AFP