Stocks rose Tuesday to end a three-day slump, with traders trying to gauge the outlook for the US economy as they price in more interest rate hikes than previously predicted.
The PSE index, the 30-company bellwether, climbed 56 points, or 0.84 percent, to close at 6,800.96, as five of the six subsectors advanced, with financial companies leading the way.
The broader all-share index also picked up 13 points, or 0.38 percent, to settle at 3,621.61, on a value turnover of P3.52 billion. Losers outnumbered gainers, 94 to 79, while 50 issues were unchanged.
Five of the 10 most active stocks ended in the green, led by Bank of the Philippine Islands which went up 4.11 percent to P108.80 and SM Investments Corp. which rose 2.92 percent to P897.50.
Meanwhile, the peso slightly weakened Tuesday to close at 55.08 against the US dollar from 54.95 Monday.
Asian markets were mixed Tuesday. With Wall Street closed Monday for Presidents’ Day, there were few catalysts for regional investors, with focus on the release later in the week of minutes from the Federal Reserve’s most recent policy meeting.
After data this month showed the jobs market continues to boom and prices continue to rise well above the Fed’s target, several Fed officials have lined up to warn borrowing costs will need to go much higher for longer than was previously expected.
Some have even suggested they were open to lifting rates by 50 basis points next month, twice as much as expected by markets.
That has dealt a blow to hopes the central bank would stop hiking soon and even begin cutting rates before the end of the year. The prospect of tighter policy has also fanned fears of a recession.
Chuck Cumello, of Essex Financial Services, told Bloomberg Radio: “We’re in for a more volatile ride and I think the market is finally waking up to [the idea that] rates are going to stay higher for longer.”
Hong Kong led losses, shedding more than one percent, while Tokyo, Sydney, Singapore, Jakarta and Wellington were also down.
Shanghai, Seoul, Taipei, Mumbai and Bangkok edged up.
After enjoying a strong January, markets stuttered this month as hopes for a rate cut subsided. SPI Asset Management’s Stephen Innes said dealers were also still assessing China’s reopening.
“Since the Chinese New Year holiday ended in late January, interest rates have been higher (and) the dollar has staged a modest rebound. As a result, regional equities have softened,” he said in a commentary.
“Some of these moves reflect a hawkish repricing of Fed expectations based on more robust growth and inflation data. But regional weakness also appears to reflect skepticism about the likely strength of China’s recovery, based on the recent underperformance of Chinese equities.”
Oil prices were also mixed as worries about higher interest rates and a possible recession played off against hopes that China’s reopening will fuel a surge in demand. With AFP