Stocks rose Tuesday as investors brushed off a reverse on Wall Street and focused on signs of slowing inflation and China’s moves to shore up its economy.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, climbed 64 points, or 1 percent, to close at 6,418.94, as five of the six subsectors advanced.
The broader all-share index also picked up 26 points, or 0.8 percent, to settle at 3,379.58 on a value turnover of P5.1 billion. Gainers outnumbered losers, 102 to 83, while 49 issues were unchanged.
Seven of the 10 most active stocks ended in the green, led by Converge ICT Inc. which soared 8.9 percent to P13.94 and SM Investments Corp. which went up 3.3 percent to P8.70. Ayala Corp. gained 2.4 percent to P687.00.
Most Asian markets also traded higher. A largely positive meeting between US President Joe Biden and Chinese counterpart Xi Jinping indicated an easing of tensions between the powers and added to the upbeat mood on trading floors.
Still, there remains a lot of trepidation that central bank interest rate hikes aimed at taming inflation will eventually send economies into a recession.
And since Thursday’s forecast-beating consumer prices data, Federal Reserve officials have warned there were more increases in the pipeline, though they are not expected to be as big as the previous four rises, of 75 basis points.
The latest was vice chair Lael Brainard, who said that while it would probably be right to slow down the rate hikes, “we have additional work to do both on raising rates and sustaining restraint to bring inflation down”.
The comments, along with profit-taking, helped push Wall Street’s three main indexes into the red and pushed the dollar up against its peers, having tumbled last week.
Stephen Innes at SPI Asset Management said: “With US growth yet to fall off a cliff, make no mistake, inflation is still at the fulcrum of market expectations as board members continue to push back a bit on market pricing.”
However, Asian traders were a little more upbeat, cheered by China’s move to ease some of its strict Covid-19 restrictions and provide much-needed support to its beleaguered property sector.
Hong Kong rose more than four percent and Shanghai also closed in positive territory.
Tokyo, Singapore, Seoul, Manila, Mumbai, Taipei, Jakarta, Bangkok and Wellington also gained, but Sydney dipped.
Paris and Frankfurt rose at the open though London was slightly down.
Optimism for a thawing in relations between Washington and Beijing was boosted after Biden and Xi’s extended talks on the sidelines of the G20 summit in Indonesia.
While there remain differences on hot-potato issues such as Taiwan, the two did find common ground on the Ukraine conflict, climate and the need to avoid another Cold War.
After the talks, Chinese Foreign Minister Wang Yi described it as a “new starting point”, adding that Beijing hoped “to stop the tumbling of bilateral ties and to stabilise the relationship.”
After a painful year for markets across the planet, dealers are hopeful that there is finally light at the end of the tunnel.
“It’s certainly a time to be thinking about a recovery regime unfolding for markets,” said Kristina Hooper of Invesco.
“But it’s going to take a little time before we know if this really is something of a turning point for inflation and the Fed can be a lot more comfortable about hastening the end of tightening,” she told Bloomberg Radio. With AFP
