Philippine stocks rebound on BSP rate cut hopes

Philippine shares rebounded on Monday amid expectations of a rate cut by the Bangko Sentral ng Pilipinas (BSP) as early as August and following the performance of US markets over the weekend.

The Philippine Stock Exchange index rose by 0.96% or 64.09 points to close at 6,682.78 on Monday, while the broader all shares index climbed by 0.69% or 24.55 points to end at 3,548.70.

“Optimism that the BSP would cut interest rates by the second half lifted the sentiment. Investors were also digesting the first-quarter earnings results,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

BSP Governor Eli M. Remolona, Jr. last week said the Monetary Board could begin their easing cycle by August and cut rates by 25 basis points (bps) once or twice in the second semester amid an improving inflation outlook.

The central bank last week maintained its policy rate at a 17-year high of 6.5% for a fifth straight meeting. It raised borrowing costs by a cumulative 450 bps from May 2022 to October 2023.

“Along with the Asian markets, the local bourse gained this Monday… following the performance of the US markets last Friday,” Ms. Alviar added.

Asian shares hit two year highs on Monday as investors wagered on interest rate cuts around the corner and China stepping up efforts to steady its ailing property sector, Reuters reported.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4%, Japan’s Nikkei rose 0.7% and hit a five-week high and world shares were within a whisker of last week’s record peaks.

Meanwhile, the Dow Jones industrial average closed above the 40,000 mark for the first time on Friday, with other major indexes also scoring weekly gains, as data supported expectations for interest rate cuts by the US Federal Reserve this year.

“Philippine shares bounced back from the previous session’s weakness as the equities market gears up for another eventful week ahead,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message, with notable releases including reports on existing home sales and durable goods orders, as well as minutes of the Fed’s latest meeting.

Back home, all sectoral indices ended higher on Monday. Mining and oil gained by 4.94% or 458.16 points to 9,718.50; financials rose by 1.68% or 33.91 points to 2,049.94; services went up by 1.48% or 28.80 points to 1,971.12; industrials climbed by 0.78% or 71.76 points to 9,249.82; property increased by 0.5% or 13.12 points to 2,600.80; and holding firms inched up by 0.28% or 16.57 points to 5,895.56.

Value turnover dropped to PHP 5.797 billion on Monday with 513.47 million shares changing hands from the PHP 19.43 billion with 1.11 billion issues traded on Friday.

Advancers beat decliners, 122 versus 72, while 42 names ended unchanged.

Net foreign selling stood at PHP 248.11 million on Monday versus the PHP 31.22 million in net buying seen on Friday. — R.M.D. Ochave with Reuters