PSEi climbs as Powell hints at September Fed cut
PHILIPPINE STOCKS rose further on Thursday after the US Federal Reserve hinted at a September rate cut.
The Philippine Stock Exchange index (PSEi) went up by 1.12% or 74.74 points to end at 6,693.83 on Thursday, while the broader all shares index climbed by 0.87% or 31.47 points to finish at 3,629.18.
“The local market rose as investors took positive cues from Wall Street overnight as the Fed signaled that a rate cut in September could be possible. A rate cut by the Fed is seen to somehow give more room for the Bangko Sentral ng Pilipinas to ease its own policy,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.
“Philippine shares started the month with bargain hunting following the sentiment of Fed meeting. Gains were influenced by Fed Chair Jerome H. Powell signaling the possibility of an interest rate cut at the next meeting if data continues to show easing inflation,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
Mr. Powell said on Wednesday interest rates could be cut as soon as September if the US economy follows its expected path, putting the central bank near the end of a more than two-year battle against inflation but square in the middle of the nation’s presidential election campaign, Reuters reported.
The Fed ended its latest two-day policy meeting with a decision to hold its benchmark interest rate steady in the 5.25%-5.5% range that was set a year ago, but its statement softened the description of inflation and said the risks to employment were now on a par with those of rising prices — neutral language that opens the door for rates to fall after more than two years of tightening credit.
Mr. Powell pushed the message even further forward in his post-meeting press conference, noting that price pressures were now easing broadly in the economy — what he called “quality” disinflation — and that if coming data evolves as anticipated, support for cutting rates will grow.
Investors saw Mr. Powell’s comments as clearly setting the stage for a reduction in borrowing costs at the Fed’s Sept. 17-18 meeting.
All sectoral indices ended higher on Thursday. Financials gained by 2.75% or 54.75 points to end at 2,045.02; mining and oil increased by 1.7% or 141.70 points to 8,463.79; property went up by 1.34% or 34.68 points to 2,608.93; services climbed by 1.23% or 24.91 points to 2,042.16; holding firms rose by 0.31% or 18.06 points to 5,794.83; and industrials added 0.06% or 5.66 points to close at 9,274.82.
Value turnover fell to P4.39 billion on Thursday with 449.8 million shares changing hands from the P5.62 billion with 421.19 million issues traded on Wednesday.
Advancers beat decliners, 104 versus 75, while 50 issues ended unchanged.
Net foreign selling rose to P42.78 million on Thursday from P19.79 million on Wednesday. — R.M.D. Ochave with Reuters