PSEi surges to 6,600 level on Fed rate cut hopes
THE MAIN INDEX surged to the 6,600 level on Thursday ahead of the release of June US consumer price index (CPI) inflation data, which could bolster bets of a September rate cut by the US Federal Reserve.
The benchmark Philippine Stock Exchange index (PSEi) went up by 1.84% or 119.89 points to end at 6,609.24 on Thursday, while the broader all shares index increased by 1.3% or 45.64 points to close at 3,555.68.
This was the PSEi’s best finish and marked its return to the 6,600 level for the first time in over a month, or since it closed at 6,619.89 on May 24.
“The local index rose strongly with Asian markets on the back of a record rally in US stocks, fueled by bets that US June inflation data will reinforce expectations of Federal Reserve interest rate cuts starting in September,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
“With the PSEi closing above 6,600 on healthy volume, we may see trading momentum and positive sentiment lift the market toward the 6,700 resistance in the coming sessions,” Mr. Colet added.
Markets are expecting June US CPI to be lower than the consensus estimate of 3.1%, AB Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.
“Recent economic data point toward weakness in demand, such as lower-than-expected PMI (purchasing managers’ index) numbers and a rise in the unemployment rate. These indicators suggest the possibility of easing monetary policy in the US, which has reduced pressures on the local market,” Mr. Vistan said.
Asian stocks rallied to record peaks on Thursday as traders counted down to US data that is expected to show inflation easing and pave the way for rate cuts as soon as September, Reuters reported.
Japan’s Nikkei rose 1% to a record high of 42,426.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.2% to a two-year high. Taiwan stocks hit a record peak and Australia’s ASX 200 closed within a whisker of its all-time top.
Fed Chair Jerome H. Powell told lawmakers on Capitol Hill overnight that “more good data” would build the case for the US central bank to cut interest rates. Futures pricing implies about a 75% chance of a cut in September.
All sectoral indices closed higher on Thursday. Holding firms jumped by 2.34% or 129.74 points to 5,661.28; industrials rose by 1.85% or 166.96 points to 9,188.81; property went up by 1.66% or 42.42 to 2,584.08; mining and oil gained 1.30% or 110.61 points to end at 8,572.60; services climbed by 1.22% or 24.62 points to 2,035.43; and financials increased by 1.1% or 21.97 points to 2,014.96.
Value turnover rose to P6.8 billion on Thursday with 427.66 million shares changing hands from the P6.22 billion with 413.15 million issues traded on Wednesday.
Advancers overwhelmed decliners, 117 versus 68, while 60 names closed unchanged.
Net foreign buying stood at P68.47 million on Thursday versus the P202.79 million in net selling recorded on Wednesday. — S.J. Talavera with Reuters