Drop in US unemployment lifts Philippine stocks

Font Size

PSE bells

By Denise A. Valdez, Reporter

LOCAL SHARES bounced back on Monday as investors reacted to the unexpected rise in jobs in the United States in May.

The benchmark Philippine Stock Exchange index (PSEi) gained 48.87 points or 0.75% to close at 6,514.00. The broader all shares index added 54.12 points or 1.43% to 3,827.40.

“The local market rallied…on the back of the unexpected 2.5 million job increase in the US last May. The employment data became a source of hope for investors as it pointed towards the recovery of the US economy which in turn could spill over to the rest of the globe,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message.

The US ended last week with a report that its economy had started to rebound in May, generating jobs that reduced its unemployment rate to 13.3%. This is an improvement from the record 20.5 million jobs the country lost in April due to lockdowns triggered by the coronavirus disease 2019 (COVID-19) pandemic.

The report resulted in a rally in Wall Street on Friday, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite indices climbing 3.15%, 2.62% and 2.06%, respectively.

The improvement in US markets spilled over to the Philippines on Monday, as Mr. Tantiangco said this spurred optimism that other economies may soon recover from the COVID-19 pandemic, too.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan pointed to the same driver for the PSEi’s performance. He said the drop in US unemployment in May similarly resulted in lower gold prices and higher oil prices.

“Here at home, investors also remained optimistic with respect to our local economy amid the relaxed quarantine measures especially in key economic areas such as Metro Manila,” Mr. Tantiangco said.

Five of six sectoral indices were gainers at the close of session: mining and oil surged 427.11 points or 8.63% to 5,374.11; industrials rose 198.32 points or 2.54% to 8,003.07; property added 45.33 points or 1.39% to 3,304.81; holding firms improved 78.69 points or 1.19% to 6,690.40; and services increased 7.16 points or 0.51% to 1,404.07.

The sole declining index was financials, which lost 20.73 points or 1.52% to 1,340.46 at the end of trading.

Value turnover stood at P9.63 billion on Monday from P9.11 billion at the end of Friday’s session. Some 1.18 million issues switched hands.

“Net value turnover today posted P8.96 billion, higher than the year-to-date average of P5.81 billion, implying that the rally had conviction,” Mr. Tantiangco said.

Advancers beat decliners, 157 against 58, while 35 names ended unchanged.

Foreign investors ended up as net sellers, with net outflows amounting to P147.43 million from net inflows of P476.37 million on Friday.