Stocks rise further ahead of Fed policy decision

Local equities continued to climb on Wednesday as investors awaited the US Federal Reserve’s policy announcement overnight.

The Philippine Stock Exchange index (PSEi) went up by 18.02 points or 0.27% to close at 6,679.13 on Wednesday, while the broader all shares index inched up by 5.63 points or 0.15% to end at 3,546.01.

“Shares on the Philippine Stock Exchange closed higher ahead of the US Federal Reserve’s expected interest rate rise to be delivered later in the day,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message on Wednesday.

“Meanwhile, the Philippine central bank said it is ready to resume its policy tightening, if necessary, as inflation continues to be a challenge. The Monetary Board will have to take into consideration how the market reacts to the possible Fed hike before discussing policy at its Aug. 17 meeting,” Mr. Arce added.

“Share prices moved sideways as renewed concerns on inflation and its impact on domestic interest rates. Inflation reared its ugly head again as global prices of rice and sugar rose to multi-year highs while more recently prices of wheat and oil also rose,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

Investors were also awaiting the Fed’s policy outlook, Mr. Vistan likewise said.

The US central bank was set to announce its policy decision at the end of its two-day meeting overnight. It was expected to hike policy rates by 25 basis points (bps).

The Fed raised its target interest rate by a total of 500 bps to a range between 5% and 5.25% before pausing its tightening cycle last month.

Meanwhile, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila, Jr. said on Tuesday that the central bank is ready to resume its rate hike cycle if needed.

The BSP last month kept benchmark interest rates unchanged for a second straight meeting after raising borrowing costs by a cumulative 425 bps from May 2022 to March 2023.

Sectoral indices were split on Wednesday. Mining and oil rose by 148.66 points or 1.44% to 10,434.79; holding firms gained 63.93 points or 0.99% to end at 6,486.71; and services climbed by 1.43 points or 0.09% to close at 1,597.63.

Meanwhile, property fell by 11.29 points or 0.41% to 2,703.78; industrials declined by 26.82 points or 0.28% to 9,319.60; and financials dropped by 2.13 points or 0.1% to 1,962.82.

Value turnover rose to PHP 4.44 billion on Wednesday with 462.23 million shares changing hands from the PHP 4.34 billion with 616.12 million issues seen on Tuesday.

Decliners outnumbered advancers, 87 versus 78, while 56 names closed unchanged.

Net foreign selling decreased to PHP 140.27 million on Wednesday from the PHP 215.77 million seen on Tuesday. — A.H. Halili