Stocks rebound on hopes of September Fed cut
PHILIPPINE STOCKS rebounded to hit a fresh four-month high on Thursday on growing expectations of a rate cut by the US Federal Reserve next month.
The bellwether Philippine Stock Exchange index (PSEi) rose by 0.88% or 61.34 points to end at 6,961.96 on Thursday, while the broader all shares index went up by 0.68% or 25.35 points to close at 3,749.73.
Thursday’s close was the PSEi’s best finish in more than four months or since it ended at 6,979.81 on April 1.
“The local market bounced back this Thursday… Investors took cues from Wall Street’s rally overnight driven by the Federal Reserve’s July meeting minutes, which hinted at possible rate cuts by September,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
“Most Fed officials signaled that easing monetary policy would be appropriate if economic data meets expectations, raising hopes for lower interest rates soon. All eyes are now on Fed Chair Jerome H. Powell, who is set to speak at the Jackson Hole Economic Symposium on Friday, potentially offering further guidance on the Fed’s next steps,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
The Fed appears to be very much on track for an interest rate cut in September after a “vast majority” of officials said such an action was likely, according to the minutes of the US central bank’s July 30-31 meeting, Reuters reported.
The minutes, which were released on Wednesday, even showed some policymakers would have been willing to reduce borrowing costs at last month’s gathering.
The policy-setting Federal Open Market Committee left its benchmark interest rate unchanged in the 5.25%-5.5% range on July 31, but opened the door to a cut at the Sept. 17-18 meeting.
Financial markets have been expecting the September meeting to kick off the Fed’s policy easing, with as much as a full percentage point worth of rate cuts expected by the end of this year.
Majority of sectoral indices closed higher. Financials rose by 2.52% or 52.17 points to 2,122.39; holding firms increased by 0.72% or 42.58 points to 5,883.84; services climbed by 0.71% or 15.92 points to 2,238.06; and industrials went up by 0.32% or 29.97 points to 9,237.94.
On the other hand, property declined by 0.67% or 18.30 points to 2,704.59; and mining and oil dropped by 0.06% or 5.17 points to 8,155.97.
Value turnover rose to P6.99 billion on Thursday with 653.22 million shares changing hands from the P5.14 billion with 863.73 million stocks traded on Wednesday.
Advancers beat decliners, 117 versus 80, while 43 names were unchanged.
Net foreign buying rose to P2.34 billion on Thursday from P565.27 million on Wednesday.
Philippine financial markets will be closed on Friday (Aug. 23) for a special nonworking holiday in observance of Ninoy Aquino Day, which was moved from the original Aug. 21 date. — R.M.D. Ochave with Reuters
