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Monday, June 17, 2024

PH stocks climb on optimism over lower interest rates

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Local shares rose Monday, tracking Asian markets’ movement, following the strong performance of US equities on Friday.

The 30-company Philippine Stock Exchange index jumped 64.09 points, or 0.97 percent, to close at 6,682.78, while the broader all-shares index added 24.55 points, or 0.70 percent, to settle at 3,548.70.

All sectoral indices ended the in green led by mining and oil which went up 4.95 percent, financials by 1.68 percent and services by 1.48 percent.

Philstocks Financial Inc. research analyst Claire Alviar said the renewed optimism the Bangko Sentral ng Pilipinas would lower interest rates by the second half of the year boosted investor sentiment.

“Investors were also digesting the first quarter earnings results,” Alviar said.

Net market value turnover reached P5.05 billion. Foreign investors were net sellers by P248.1 million.

Equities rose Monday, extending a rally in New York that saw the Dow close at a record high, with sentiment boosted by China’s plan to support its struggling property sector and hopes for a US interest rate cut.

The announcement out of Beijing on Friday provided a much-needed boost to the country’s ailing developers, many of whom are drowning in a sea of debt.

The multibillion-dollar plan, as well as an easing of deposit requirements for buyers, fueled optimism for the outlook on the world’s number-two economy, which has been hobbled by the property crisis.

While analysts have warned the package of proposals was still too small to solve the problem and might not go far enough, traders continued to buy up risk assets.

“We believe the policy package is just the beginning of the central government’s efforts to turn the sector around,” said Nomura Holdings analysts.

“We believe the swift introduction of the policy package with arguably limited implementation details also implies the central government’s increasing urgency to alleviate the downward spiral of the property sector.”

Hong Kong extended its recent gains, though some Chinese developers fell on profit-taking after soaring in the previous session. Shanghai, Tokyo, Sydney, Seoul, Mumbai, Wellington, Taipei, Manila and Jakarta also advanced.

Bangkok edged slightly higher as data showed the Thai economy grew more than expected in the first quarter but at a slower pace than the previous three months.

London, Paris and Frankfurt also rose.

The positive start to the week came after the Dow ended above 40,000 for the first time on Friday, while the S&P 500 also rose.

Investors are now looking forward to the release Wednesday of minutes from the Federal Reserve’s May policy decision, hoping for some insight into the thinking of decision-makers.

The release comes after data last week showed inflation easing in April, reviving hopes the central bank would cut rates twice this year. That came after inflation rising more than expected in the previous three months.

Analysts forecast two reductions before January, with more over the next two years.

However, Fed governor Michelle Bowman said she thought borrowing costs should remain elevated in order to make sure officials have prices under control, and warned she would support another hike if data came in above estimates.

“My baseline outlook continues to be that inflation will decline further with the policy rate held steady, but I still see a number of upside inflation risks that affect my outlook,” she said.

“There is also the risk that the loosening in financial conditions since late last year and additional fiscal stimulus could add momentum to demand, stalling any further progress or even causing inflation to reaccelerate.

“While the current stance of monetary policy appears to be at a restrictive level, I remain willing to raise the target range for the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed.”

The prospect of US interest rates coming down boosted gold prices to another record of $2,440.59 — topping its previous all-time high seen last month — as lower borrowing costs make the precious metal more attractive.

The gains have also been fueled by its safe-haven status after news that Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amir-Abdollahian had been killed in a helicopter crash.

Copper also hit a record above $11,000 on optimism over the outlook for the global economy thanks to the expected easing of borrowing costs. With AFP


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