The local stock market continued its bull-run Monday, sending the benchmark index above the 7,000 level, following another rally on Wall Street fueled by optimism over the world economy as inflation slows and China reopens to the world.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, climbed 93 points, or 1.35 percent, to close at 7,045.48, as four of the six subsectors advanced.
The broader all-share index also went up by 37 points, or 1.03 percent, to settle at 3,675.15, on a value turnover of P10.23 billion. Gainers outnumbered losers, 138 to 65, while 46 issues were unchanged.
Nine of the 10 most active stocks ended in the green, led by BDO Unibank Inc. which jumped 5.46 percent to P125.50 and SM Investments Corp. which went up 4.30 percent to P947.00.
The peso also strengthened Monday to close at 54.57 against the US dollar from 54.89 Friday. Most regional currencies appreciated against the greenback on expected slowdown in Federal Reserve rate hikes.
Most Asian markets rose Monday. After last year’s battering, caused by surging prices and central bank interest rate hikes, the new year has seen a calmer mood on trading floors, with recession fears receding and bargain-buying providing support to equities.
While China is expected this week to report its worst annual growth since 1976—excluding pandemic-ravaged 2020—its emergence from zero-Covid and pledges to boost key sectors are raising hopes for a strong rebound in 2023.
Signs that the government was taking a lighter touch on the tech sector after a long-running crackdown were also lifting confidence and giving a boost to market majors, including Alibaba and Tencent.
And HSBC’s Frederic Neumann said China’s emergence from almost three years of strict virus containment measures would likely boost the global economy.
“As the second-largest economy in the world, accelerating Chinese household and investment spending will help put a floor under global trade at a time when demand in the West is faltering,” he said.
The brighter outlook helped Asian markets in early trade Monday.
Shanghai, Sydney, Seoul, Taipei, Manila, Bangkok, Wellington and Jakarta all rose.
Tokyo, however, dropped as a stronger yen weighed on exporters and Hong Kong retreated on profit-taking, after having rallied around nine percent since the start of the year. Singapore and Mumbai also dipped.
The Japanese unit has surged in recent weeks thanks to an expected slowdown in Federal Reserve rate hikes and after the Bank of Japan signaled a shift away from years of ultra-loose monetary policy.
Expectations the Fed will hike rates by just a quarter-point at its next meeting have pushed the greenback down against other major peers, including the pound and euro.
Last week’s data showing US inflation at its lowest since October 2021 has boosted equities and lowered bets on a recession in the world’s top economy.
The improving sentiment was highlighted by news that US consumer confidence hit a 12-month high in December, helped by a drop in gasoline prices.
And there is growing optimism that the worst-case scenario of a so-called hard landing for the economy –caused by soaring borrowing costs—will not happen.
“Driven by the combination of China re-opening and falling natural gas prices, the market is forced to upgrade its pessimistic growth outlook for this year,” said SPI Asset Management’s Stephen Innes.
“Peak recession fears may end sooner rather than later, and H2 could see a renewed pick-up in economic activity precisely when major central banks stop hiking.” With AFP