The peso and local stocks climbed Thursday, as investors returned to emerging markets including the Philippines after digesting minutes from the US Federal Reserve’s December meeting.
The peso gained P0.19 Thursday to close at 49.46 against the greenback. It was the local currency’s strongest level since it settled at 49.35 a dollar on Nov. 16, 2016. Total volume traded reached $879 million, higher than $529 million that changed hands Wednesday.
“Market jitters from Trump triumph and US Fed fear seem to be easing. Markets seem to be digesting the strong macroeconomic fundamentals of the Philippines,” Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said in a text message.
He said markets also appeared to be “appreciating the solid tax reform package of the government which represents a progressive tax policy which would produce net positive results and expand fiscal space.”
Stocks also rallied for a third day, pushing the benchmark index to a two-month high as investors returned to emerging markets including the Philippines after digesting minutes from the US Federal Reserve’s December meeting.
The Philippine Stock Exchange index, the 30-company benchmark, jumped 178 points, or 2.5 percent, to close at 7,209.44 Thursday. This brought total gains this year to 5.4 percent, following last year’s 1.6-percent loss.
The broader all-share index also rose 88 points, or 2.1 percent, to settle at 4,336.77, on a value turnover of P10.3 billion. Advancers overwhelmed losers, 146 to 55, while 32 issues were unchanged.
All six major sectors advanced, while 18 of the 20 most active stocks ended in the green, led by Security Bank Corp. which soared 8.9 percent to P2.20 and SM Investments Corp. which climbed 6 percent to P689. Ayala Corp. gained 4 percent to P790.
Meanwhile, the Hang Seng index headed for the highest close in three weeks, and Singapore shares jumped the most since November. The greenback weakened as the Fed minutes highlighted concerns about the impact of a strong currency on the new US administration’s stimulatory economic policies.
Uncertainty over the path of US fiscal policy weighed heavily on the Fed’s discussion of the economy and the path of monetary policy when it decided to lift rates last month, minutes from that meeting showed.
Despite growing attention to the risks of fiscal policy spurring faster growth than currently forecast, most on the committee reiterated that a “gradual” pace of rate hikes over the coming years would likely remain appropriate. Stocks have rallied with the dollar, while Treasuries have plunged since Trump’s election.
“President-elect Donald Trump remains an unknown factor in the growth equation even for the Federal Reserve,” said Jingyi Pan, a market strategist at IG Asia Pte based in Singapore. “A fraction of the committee members were noted to have abstained from accounting for the projected expansion in their forecasts.”
Singapore’s Straits Times Index climbed 1.2 percent, the most since Nov. 10. Japan’s Topix index rose 0.1 percent and Australia’s S&P/ASX 200 Index advanced 0.3 percent. South Korea’s Kospi index slid 0.2 percent and New Zealand’s S&P/NZX 50 was little changed.
India’s S&P BSE Sensex increased 0.8 percent. The MSCI South East Asia index climbed 1.4 percent, on top of its 1.5 percent advance Wednesday, as Philippine shares rallied for a third day and Thailand’s benchmark touched a 20-month high.
The gauge is at its highest since November. Futures on the S&P 500 were little changed after the underlying gauge rose 0.6 percent in New York. The Dow Jones Industrial Average resumed its pursuit of 20,000, rising to 19,942.16. The Stoxx Europe 600 Index fell 0.1 percent Wednesday to halt a three-day advance that took the measure into a bull market.
Crude oil futures fell 0.2 percent after Wednesday’s 1.8 percent advance. US inventories were projected to have declined while OPEC and other producers implement promised production cuts. Gold rose 1.1 percent to $1,177.31, the highest level in a month.
US central bankers hinted Wednesday they may need to raise interest rates faster than planned due to “considerable uncertainty” linked to Donald Trump’s fiscal stimulus plans, which could fan inflation, according to minutes of the final 2016 policy meeting at which the Fed lifted rates.
The president-elect’s pledge to slash taxes and ramp up infrastructure spending could boost demand above sustainable levels, “potentially necessitating somewhat tighter monetary policy than currently anticipated,” many participants in the Dec. 13-14 meeting said.
Despite these risks, the minutes repeatedly said the central bank expects it can continue to make only “gradual adjustments” in the interest rate.
The dollar fell as the Fed minutes highlighted concerns about the impact of a strong currency on the new US administration’s stimulatory economic policies. With AFP, Bloomberg
