PHL shares climb as Fed begins two-day meeting

SHARES closed higher on Tuesday as the US Federal Reserve was set to begin a two-day policy meeting overnight, where it is expected to resume its tightening cycle.

The Philippine Stock Exchange index (PSEi) rose by 29.86 points or 0.45% to 6,661.11 on Tuesday, while the broader all shares index went up by 13.67 points or 0.38% to 3,540.38.

“Philippine shares notched a winning session ahead of the Fed’s policy meeting later tonight. The market widely expects the Fed to raise rates by 25 bps (basis points),” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Throughout the week, traders await the latest data on the personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge,” Mr. Limlingan added. The June US PCE index report will be released on June 28.

The Fed is expected to raise its target interest rate by 25 bps to the 5.25%-5.5% range at its meeting this week, which analysts have said could be its last rate hike for this tightening cycle amid slowing inflation.

In June, the Fed paused its rate hike cycle after raising borrowing costs by a cumulative 500 bps.

The US consumer price index (CPI) rose by 0.2% last month after climbing by 0.1% in May.

In the 12 months through June, the CPI climbed by 3% after the 4% increase seen in May.

“The local bourse gained by 29.86 points (0.45%) to 6,661.11 as investors digested President Marcos’ State of the Nation Address [on Monday]. Moreover, optimism from overseas as China vowed more support for troubled property companies boosted the sentiment at home,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said.

China’s top leaders pledged on Monday to step up policy support for the economy amid a tortuous post-COVID recovery, focusing on boosting domestic demand and signaling more stimulus steps, Reuters reported.

“Many investors, however, were still on the sidelines… as they waited for the decision of the Federal Reserve on interest rates,” Ms. Alviar added.

All sectoral indices went up on Tuesday. Mining and oil rose by 103.23 points or 1.01% to 10,286.13; financials climbed by 13.27 points or 0.68% to 1,964.95; services went up by 10.17 points or 0.64% to 1,596.20; industrials increased by 48.21 points or 0.51% to 9,346.42; property jumped by 8.56 points or 0.31% to 2,715.07; and holding firms gained 15.95 points or 0.24% to close at 6,422.78.

Value turnover went up to P4.34 billion on Tuesday with 616.12 million shares changing hands from the P3.11 billion with 659.64 million issues seen on Monday.

Advancers and decliners ended at 90 apiece, while 51 names closed unchanged.

Net foreign selling stood at P215.77 million on Tuesday from the P128.4 million in net buying seen on Monday. — A.H. Halili with Reuters