PSEi climbs above 6,300 mark on Fed cut hopes

Philippine shares jumped on Wednesday as the market tracked gains on Wall Street after the July US consumer inflation data released overnight bolstered expectations of a September rate cut by the US Federal Reserve.

The benchmark Philippine Stock Exchange index (PSEi) rose by 0.56% or 35.24 points to close at 6,325.09, while the broader all shares index went up by 0.35% or 13.37 points to 3,764.64.

“The local market extended its rise this Wednesday on the back of positive cues from Wall Street. This comes as the US’ July inflation rate came in at 2.7%, unchanged from the prior month and below expectations, raising hopes that the Federal Reserve will cut policy rates in their next meeting,” Philstocks Financial Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

“The PSEi closed at 6,325.09, up by 0.56%, as investors’ confidence was renewed after the index’s strong performance [on Tuesday] and the influx of more corporate earnings reports,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “Sentiment was also lifted by the steady US inflation report, which could influence the Fed’s monetary policy and overall investor sentiment in the country.”

Wall Street’s main indexes rose on Tuesday, with the S&P 500 and the Nasdaq at record highs after data showed inflation rose broadly in line with expectations in July, bolstering expectations that the US Federal Reserve could lower interest rates next month, Reuters reported.

A Labor Department report showed that the consumer price index rose by an expected 0.2% on a monthly basis in July, while annual inflation came in slightly below forecasts, drawing calls from US President Donald J. Trump to lower interest rates.

However, there was also some caution, as the data suggested that underlying inflation rose by its fastest pace in six months in July as markets look for signs that tariffs and trade uncertainty were filtering into prices.

The majority of sectoral indices closed in the green on Wednesday. Holding firms jumped by 1.47% or 77.60 points to 5,336.87; financials increased by 1.12% or 23.81 points to 2,150.05; property rose by 0.41% or 10.04 points to 2,438.55; and industrials climbed by 0.13% or 11.61 points to 8,927.40.

Meanwhile, services declined by 0.92% or 21.59 points to 2,315.58 and mining and oil fell by 0.17% or 16.25 points to 9,330.78.

“Alliance Global Group, Inc. was the top index gainer, jumping 7.14% to PHP 7.50. Bloomberry Resorts Corp. was the main index laggard, plunging 8.61% to PHP 3.29,” Mr. Tantiangco said.

Value turnover dropped to P10.61 billion on Wednesday with 893.55 million shares traded from the PHP 13.73 billion with 756.75 million shares exchanged on Tuesday. 

Advancers bested decliners, 103 versus 91, while 58 names were unchanged.

Net foreign buying went up to PHP 973.04 million on Wednesday from PHP 239.51 million on Tuesday. — R.M.D. Ochave with Reuters