Local stocks track Wall St. rally on Fed hike bets

SHARES went up on Monday, mirroring Wall Street’s climb, as investors were hopeful that improved US economic data could lead to slower tightening by the US Federal Reserve.

The 30-member Philippine Stock Exchange index (PSEi) rose by 122.27 points or 1.83% to close at 6,790.24 on Monday, while the broader all shares index added 55.90 points or 1.59% to end at 3,568.97.

“The PSEi mimicked the strong move from the US market, closing today up 1.83%,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message on Monday.

“The Dow Jones was up 700 points last Friday, continuing its strong start this 2023. With good data results, investors are still hopeful that the central bank will pivot,” Mr. See added.

Sentiment on Wall Street got a boost last week from a benign blend of solid US payroll gains and slower wage growth, combined with a sharp fall in service-sector activity, Reuters reported. The market scaled back bets on rate hikes for the Fed.

On Friday, the Dow Jones Industrial Average rose by 700.53 points or 2.13% to 33,630.61; the S&P 500 gained 86.98 points or 2.28% at 3,895.08; and the Nasdaq Composite added 264.05 points or 2.56%, at 10,569.29.

US nonfarm payrolls rose by 223,000 jobs in December, the smallest gain in two years after rising 256,000 the previous month, while the 0.3% rise in average earnings was smaller than expected and less than the previous month’s 0.4%.

“The market was up on hopes for eventual Federal Reserve’s pause in its rate hiking amid falling inflation,” First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said in a Viber message.

In November, the US consumer price index rose less than expected by 0.1% after advancing by 0.4% in October. The December inflation report will be released on Jan. 12, Thursday.

The Fed in 2022 hiked rates by 425 basis points.

Back home, all sectoral indices closed higher on Monday. Mining and oil surged by 343.72 points or 3.04% to 11,631.66; financials added 37.22 points or 2.20% to end at 1,723.38; holdings firms increased by 118.36 points or 1.82% to 6,600.33; property rose by 52.57 points or 1.77% to 3,020.51; services gained 21.93 points or 1.31% to close at 1,686.21; and industrials went up by 122.01 points or 1.27% to 9,682.91.

Advancers overwhelmed decliners, 148 versus 47, while 43 names closed unchanged.

Value turnover climbed to P6.41 billion on Monday with 2.46 billion shares changing hands from the P5.47 billion with 7.15 billion issues traded on Friday.

Net foreign buying went up to P283.83 million from P180.11 million the previous day.

“The index will likely break its resistance level at 6,840 and might move further to its next resistance at 7,150,” Mercantile Securities’ Mr. See said.

He placed the PSEi’s support levels at 6,623 and 6,400, while FMIC’s Ms. Ulang placed market’s support at 6,500 and resistance at 6,900. — Justine Irish D. Tabile