PSEi back at 6,500 level on inflation, Wall St. boost

The bellwether index climbed to the 6,500 level on Thursday on continued optimism over slower-than-expected May Philippine headline inflation and boosted by the strong performance of US markets overnight amid US Federal Reserve rate cut bets.

The Philippine Stock Exchange index (PSEi) rose by 1.06% or 68.54 points to end at 6,509.86 on Thursday, while the all shares index gained by 1.04% or 36.10 points to close at 3,489.79. This was the PSEi’s best close in almost two weeks or since it finished at 6,571.60 on May 27.

“This Thursday, the local market rose as investors continued to digest the Philippines’ May inflation data, which remained within the government’s 2-4% target range,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.

“The local bourse extended its gains as investors digested the better-than-expected inflation print for May and anticipated that the Fed might lower interest rates later this year. This sentiment was bolstered by the slowdown in private payroll data, which reported 152,000 new jobs last month, adding to evidence of a weakening labor market that investors believe could prompt the Fed to cut benchmark interest rates,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said via Viber.

Headline inflation picked up for a fourth straight month to 3.9% in May from 3.8% in April, the Philippine Statistics Authority reported on Wednesday. This was a tad lower than the 4% median estimate in a BusinessWorld poll of 16 analysts.

Meanwhile, the S&P 500 and Nasdaq indexes hit record closing highs on Wednesday, powered mainly by technology stocks as markets digested economic data that could support a much-expected start to the Federal Reserve’s policy easing cycle, Reuters reported.

The May private payrolls report on Wednesday was the latest data to suggest an easing in labor market tightness that could propel the Fed to begin cutting rates this year. A report on Tuesday showed job openings fell in April to the fewest in more than three years.

The Dow Jones Industrial Average rose 96.04 points or 0.25% to 38,807.33; the S&P 500 gained 62.69 points or 1.18% to 5,354.03; and the Nasdaq Composite gained 330.86 points or 1.96% to 17,187.90.

Back home, almost all sectoral indices rose. Services climbed by 2.75% or 53.77 points to 2,003.77; industrials went up by 0.93% or 84.33 points to 9,112.03; property rose by 0.74% or 18.27 points to 2,462.48; holding firms increased by 0.69% or 39.04 points to 5,699.55; and financials inched up by 0.31% or 6.27 points to 1,993.54.

Mining and oil was the lone decliner as it lost 0.33% or 30.89 points to end at 9,132.53.

Value turnover declined to PHP 4.64 billion on Thursday with 332.43 million issues switching hands from the PHP 4.74 billion with 377.15 million shares traded on Wednesday.

Advancers beat decliners, 102 versus 81, while 60 names closed unchanged.

Net foreign buying stood at PHP 37.17 million on Thursday versus the PHP 634.52 million in net selling seen on Wednesday. — RMDO with Reuters