Stocks rally; Jollibee, Globe top gainers

The stock market bounced back Thursday after health authorities agreed to loosen lockdown restrictions in Metro Manila starting Oct. 16, improving the prospects for a faster economic recovery.

The Philippine Stock Exchange Index jumped 114.19 points, or 1.6 percent, to 7,183.11 on a value turnover of P10.3 billion. Gainers beat losers, 111 to 86, with 45 issues unchanged.

Jollibee Foods Corp., the biggest fast-food chain, advanced 6.4 percent to P229.80, while Globe Telecom Inc. climbed 4.8 percent to P3,350.

GT Capital Holdings Inc. of the Ty Group rose 4.2 percent to P5673, while conglomerate Ayala Corp. gained 3 percent at P853.

The rest of Asian markets rose Thursday as investors maintained optimism in the global recovery outlook but prepared for the end of an era of cheap cash with inflation continuing to surge on the back of supply chain problems and improving demand.

But investors remain upbeat in Asia after a broadly positive lead from Wall Street.

Tokyo piled on 1.5 percent, while Seoul and Jakarta added more than one percent. There were also gains in Sydney, Wellington, Taipei and Mumbai, while Singapore advanced as investors brushed off the surprise policy tightening by the city’s central bank. However, Shanghai dipped.

After a year and a half of ultra-loose monetary policies from the world’s central banks, which helped spur a rebound from the pandemic collapse and send equities flying, concern about consistently high price rises is forcing officials to tighten their belts.

Several have already started—including South Korea and New Zealand, with Singapore joining in on Thursday—but all eyes are on the Federal Reserve, with minutes from its most recent meeting showing it plans to move either next month or December.

A higher-than-expected reading on US consumer inflation pushed the case for a November start to tapering its massive bond-buying program, but the main question on traders’ lips is now when it will begin to hike interest rates.

“Wednesday’s still-elevated consumer price index marks about six months’ worth of hot inflation data–suggesting that inflation is not as transitory as many investors previously expected,” Nancy Davis of Quadratic Capital Management said.

“The overall inflation story is being driven by supply-chain disruptions and a swift rise in prices, due to the labor shortage.”

On Thursday, China said factory-gate inflation had in September hit its highest level in a quarter of a century owing to a spike in commodity costs and rocketing demand as economies reopen.

And with China a crucial exporter to the world, there are concerns the rises will transfer to other economies.

Meanwhile, some observers have warned of a period of stagflation in which costs soar but economic growth remains torpid. With AFP

JP Morgan Asset Management’s Virginia Martin Heriz said the outlook for now “still favors equities in the medium term although less so than before.”

“This is not stagflation that we are talking about because we are still growing well above trend,” despite signs of a slowdown in the United States and Europe, she said. With AFP