PSEi advances as US CPI data boost Fed cut hopes

PHILIPPINE SHARES climbed further on Monday following the release of US consumer price index (CPI) data, which could affect the next move of the US Federal Reserve.

The Philippine Stock Exchange index (PSEi) rose by 37.27 points or 0.56% to end at 6,680.45 on Monday, while the broader all shares index went up by 17.16 points or 0.48% to close at 3,523.77.   

“The index sustained last week’s positive momentum as it closed higher on the back of softer than expected US December producer price data and increasing market bets that the Federal Reserve will start cutting its policy rate in March,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message. 

US producer prices unexpectedly fell in December amid declining costs for goods such as diesel fuel and food, suggesting inflation would continue to subside and allow the Federal Reserve to start cutting interest rates this year, Reuters reported.

The producer price index (PPI) for final demand dipped 0.1% last month, the Labor department’s Bureau of Labor Statistics said. Data for November was revised to show the PPI falling 0.1% instead of being unchanged as previously reported. The PPI has now declined for three consecutive months.

In the 12 months through December, the PPI increased 1% after advancing 0.8% in November.

“Philippine shares continued to be bought up in January as funds continued to make bets on the issues that would outperform for 2024,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Shares rose following the appointment of Ralph G. Recto as Finance chief, Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“The local bourse extended its gains, up by 37.27 points, attributed to the expectation that the country will use non-monetary measures moving forward to stabilize prices this year, a strategy we believe is crucial to addressing inflation,” Ms. Alviar said. “If this materializes, investors can anticipate further rate cuts ahead, boosting the market sentiment.”

All sectoral indices ended higher on Monday. Mining and oil went up by 128.60 points or 1.35% to 9,637.49; services rose by 16.43 points or 1% to 1,644.71; holding firms jumped by 46.87 points or 0.73% to 6,407.62; financials climbed by 7.13 points or 0.38% to 1,843.15; property increased by 9.14 points or 0.31% to 2,900.93; and industrials added 22.24 points or 0.24% to end at 9,225.82. 

“Among the index members, Globe Telecom, Inc. led the gainers, increasing by 4.56%, while Wilcon Depot, Inc. found itself at the bottom, losing by 4.52%,” Ms. Alviar said.

Value turnover increased to P5.82 billion on Monday with 460.92 million issues changing hands from the P5.64 billion with 362.59 million shares seen on Friday.

Advancers outnumbered decliners, 107 versus 78, while 52 names ended unchanged.

Net foreign selling stood at P244.01 million versus the P360.76 million in net buying seen the previous trading day. — R.M.D. Ochave with Reuters