PSEi tracks US shares’ rise on Powell comments

PHILIPPINE SHARES rebounded on Wednesday, following Wall Street’s rise amid hawkish statements from the US Federal Reserve chair.

The 30-member Philippine Stock Exchange index (PSEi) went up by 41.82 points or 0.6% to close at 6,923.08 on Wednesday, while the broader all shares index added 19.26 points or 0.52% to end at 3,675.01.

“Investors turned bullish again today as the Dow Jones Industrial Average was up 265 points even if Powell’s speech was hawkish. The PSE index made a higher low at 6,880 and might move up to the 7,000 level,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message.

“Philippine equities rose following Powell’s speech on easing inflation. Investors now await wholesale inventories data, and the speeches of Fed high rank members,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

US stocks rallied to a convincingly higher close on Tuesday, but trade was choppy as investors digested comments from Federal Reserve Chair Jerome H. Powell about how long the central bank may need to tame inflation, Reuters reported.

The Dow Jones Industrial Average rose 265.67 points or 0.78% to 34,156.69; the S&P 500 gained 52.92 points or 1.29% to 4,164; and the Nasdaq Composite added 226.34 points or 1.9% to 12,113.79.

Mr. Powell said 2023 should be a year of “significant declines in inflation.”

His comments renewed investor hopes for less aggressive monetary policy that wavered after a strong US jobs report last Friday. “We didn’t expect it to be this strong,” Mr. Powell said at the Economic Club of Washington, referring to the nonfarm payrolls report for January, but it “shows why we think this will be a process that takes quite a bit of time.”

The current 3.4% unemployment rate, a 53-year-low, may be beyond “maximum employment” and likely would need to rise for inflation to return to the Fed’s 2% target, Mr. Powell said.

The US central bank last week raised the fed funds rate by 25 basis points (bps) to a range between 4.5% and 4.75%. This brought total hikes since March 20222 to 450 bps.

Back home, most sectoral indices closed higher on Wednesday except for holding firms, which went down by 32.40 points or 0.48% to 6,678.14.

Meanwhile, mining and oil surged by 384.49 points or 3.47% to 11,434.67; financials went up by 28.63 points or 1.58% to 1,839.41; property climbed by 40.07 points or 1.33% to 3,031.83; services added 11.57 points or 0.67% to end at 1,732.38; and industrials rose by 65.07 points or 0.66% to 9,914.31.

Value turnover went up to PHP 6.28 billion on Wednesday with 1.15 billion shares changing hands from the PHP 6.14 billion with 1.03 billion issues traded on Tuesday.

Advancers outnumbered decliners, 115 versus 66, while 53 names closed unchanged.

Net foreign selling stood at PHP 113.85 million on Wednesday versus the PHP 590.74 million in net buying seen the previous trading day. — Justine Irish D. Tabile with Reuters