PHILIPPINE SHARES rose to their highest level in almost five months on Tuesday after US Federal Reserve Chairman Jerome H. Powell said they could begin their easing cycle next month.
The Philippine Stock Exchange index (PSEi) rose 0.16% or 11.45 points on Tuesday to end at 6,973.41, while the broader stock index improved 0.3% or 11.55 points to end at 3,761.28.
This was the PSEi’s best closing price in almost five months, or since it ended at 6,979.81 on April 1.
“The PSEi followed global indices higher after Federal Reserve Chairman Powell said it is time for the Fed to adjust interest rates. However, profit-taking kept the benchmark index below the key 7,000 level,” said AP Securities, Inc. research head Alfred Benjamin R. Garcia. in a Viber message.
“Investors welcomed the Fed’s easing signals as an easing of monetary policy by the Fed would give more room for the Bangko Sentral ng Pilipinas (BSP) to also ease their policy,” Philstocks Financial, Inc. said. Senior Research Analyst Japhet Louis O. Tantiangco in a press release. a Viber message.
Mr Powell on Friday endorsed an imminent start to rate cuts, saying further cooling in the labor market would be unwelcome and expressing confidence that inflation is within range of the US central bank’s 2% target. Reuters reported.
With the policy rate currently between 5.25% and 5.5%, the Fed has “plenty of room” to cut borrowing costs to support the economy, Mr. Powell said.
Meanwhile, on August 15, the BSP cut its target reverse repurchase rate by 25 basis points (bps) to 6.25%. Before the cut, the Monetary Board kept the policy rate at a more than 17-year high of 6.5% for six consecutive meetings, following cumulative hikes worth 450 basis points between May 2022 and October 2023 to combat high inflation.
BSP Governor Eli M. Remolona Jr. said they could cut rates by another 25 basis points within a year. The remaining policy-setting meetings of the Monetary Board are on October 17 and December 19 this year.
“Philippine stocks inched towards the 7,000 level as investors start to rebalance ahead of both the MSCI and year-end close,” Regina Capital Development Corp. sales chief Luis A. Limlingan added in a Viber message .
Most sectoral indices closed lower. The services sector fell by 0.4% or 8.95 points to 2,229.11; holdings fell 0.33% or 19.45 points to 5,864.39; financial services fell 0.04% or 0.97 points to 2,121.42; and industrials fell 0.32 point to 9,237.62.
On the other hand, real estate rose 2.71% or 73.54 points to 2,778.13; and mining and oil rose 0.12% or 10.23 points to 8,166.20.
Value turnover fell to P6.8 billion on Tuesday, with 831.25 million shares changing hands from P6.99 billion, while 653.22 million shares were traded on Thursday.
The advanced players defeated the decliners, 110 versus 94, while 51 names remained unchanged.
Net foreign purchases fell to P897.83 million on Tuesday from P2.34 billion on Thursday. — RMD Ochaaf of Reuters