Stocks rebound as Fed keeps policy stance steady

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By Arra B. Francia, Reporter

SHARES bounced back on Thursday as investors welcomed the US Federal Reserve’s decision to keep rates steady, alongside end-of-the-month window dressing.

The bellwether Philippine Stock Exchange index (PSEi) gained 0.34% or 27.53 points to 8,007.48, recovering from a two-day decline. The main index rallied to just below the 8,100 mark in the middle of yesterday’s trading but failed to sustain the momentum as investors booked gains.

The broader all-shares index likewise added 0.11% or 5.32 points to close at 4,829.85.

On a monthly basis, Thursday’s finish is a 7.5% increase from the last trading day of December 2018’s close of 7,466.02.

“A Federal Reserve induced rally coupled with window dressing drove the index past 8,000 once again for a historic first month of 2019,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message.

The Federal Open Market Committee ended its two-day policy meeting with rates unchanged at 2.25-2.5%. It noted that it will continue to be “patient” as it determines rate adjustments in the future.

“The change in the Fed’s tone has cheered not only our local bourse but even the US counters and most regional peers,” Philstocks Financial, Inc. Research Associate Japhet Louis O. Tantiangco said in a separate message.

“Tightening monetary conditions has been one of the problems of equity markets around the world last year especially of emerging ones. And so the latest decision of the Federal Reserve has offered much relief.”

Wall Street indices rallied overnight, with the Dow Jones Industrial Average jumping 1.77% or 434.90 points to 25,014.86. The S&P 500 index closed 1.55% higher or 41.05 points to 2,681.05, while the Nasdaq Composite index soared 2.20% or 154.79 points to 7,183.08.

Regional markets were also in the green, with Japan’s Nikkei 225 up 1.06% to 20,773.49. Hong Kong’s Hang Seng index gained 1.07%, while the Shanghai Composite index rose 0.35%.

All sectoral indices moved to positive territory except for the property counter which dropped 0.57% or 22.69 points to 3,921.56.

Meanwhile, holding firms surged 0.95% or 75.39 points to 7,968.46, followed by mining and oil which rose 0.4% or 34.13 points to 8,503.37. Services climbed 0.32% or 5.17 points to 1,582.29; industrials firmed up 0.26% or 30.25 points to 11,667.18; while financials went up 0.11% or 2.12 points to 1,825.20.

Turnover was higher at P10.81 billion after some 2.67 billion issues switched hands, versus the previous session’s P9.62 billion.

Despite the PSEi’s rally, decliners outpaced advancers, 110 to 97, while 41 names were unchanged.

Foreign investors were net buyers for the 11th straight day, with net purchases of P818.65 million, slightly lower than Wednesday’s P843.95 million.