Stocks rose Friday on bargain hunting, while the peso advanced against the US dollar on reports that the gross international reserves hit a six-month high.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, gained 34 points, or 0.50 percent, to close at 6,876.79, as five of the six subsectors posted gains.
The broader index representing all shares also went up 9 points, or 0.27 percent, to settle at 3,653.17, on a value turnover of P5.92 billion. Gainers outnumbered losers, 93 to 90, while 60 issues were unchanged.
Six of the 10 most active stocks ended in the green, led by Manila Electric Company which climbed 11.31 percent to P315.00 and GT Capital Holdings Inc. which went up 2.91 percent to P530.00.
Analysts said investors decided to transfer their money to PLDT Inc. after the removal of ACEN Corp. from the MSCI Philippines Index. ACEN’s shares fell 3.97 percent to P7.01.
The peso closed higher at 54.42 against the US dollar Friday from 54.45 Thursday. The local currency appreciated on the back of reports that the GIR climbed to nearly $100 billion in January.
Meanwhile, most Asian markets fell, tracking another loss in New York as interest rate hike fears course through trading floors after last week’s blockbuster jobs report.
While data in recent months has shown inflation is coming down, the employment figures showed the economy remained robust, leading several top Federal Reserve officials to warn much more work was needed to get prices under control.
Having spent January optimistic that the days of central bank tightening would soon come to an end, traders have been brought back down to earth this month as they contemplate borrowing costs going higher and staying there longer than expected.
Richmond Fed president Thomas Barkin added his voice to colleagues this week in warning that the bank had to “stay the course” in lifting rates if it wanted to bring inflation down to its two percent target.
However, with the cost of borrowing going higher still—and some warning it could go to a two-decade-high six percent―fears are growing that the world’s top economy will tip into recession.
“Inflation most likely won’t get conquered if the economy doesn’t break,” said OANDA’s Edward Moya.
“Disinflation trends remain in place but it will be hard for them to continue with a strong labour market and as the economy keeps on growing. We’ve seen commodities and goods price declines, but core services remain tricky.”
He added that the Fed would continue hiking until personal consumption expenditure―the bank’s preferred inflation gauge―was trending sharply lower. “And that might not happen until the summer,” he said.
After Wall Street’s retreat, most of Asia was in the red.
Hong Kong led the losses, shedding 1.8 percent, as tech firms suffered more heavy selling pressure, while there were also losses in Shanghai, Sydney, Seoul, Singapore, Taipei, Mumbai, Bangkok and Jakarta, though a weaker yen helped Tokyo higher.
Analysts said next week’s consumer price index release will be a key data point, which could play a big role in the Fed’s plans for future rate hikes.
“Whether or not the Fed has tightened financial conditions sufficiently to bring inflation down to target over time is going to be the most significant debate in the market agenda through the first half of the year,” said SPI Asset Management’s Stephen Innes.
He added that “the fear is now that we could still be talking rate hikes in the third quarter”. With AFP
