PSEi climbs on rate hike bets ahead of US CPI

STOCKS climbed on Thursday ahead of the release of the December US consumer price index (CPI) report overnight, which investors expect to be a key consideration at the US Federal Reserve’s policy meeting later this month, and following comments from the Bangko Sentral ng Pilipinas (BSP) chief.

The bellwether Philippine Stock Exchange index (PSEi) rose by 124.19 points or 1.85% to close at 6,833.53 on Thursday, while the broader all shares index went up by 48.58 points or 1.37% to end at 3,588.04.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said shares rallied on Thursday on bets that the US central bank could deliver smaller rate hikes amid expectations of easing inflation.

“All eyes are on December’s CPI reading, to be released Thursday, with the consensus forecast calling for a slight easing in price pressures,” Mr. Limlingan added.

“Back home, investors digested recent signals from the BSP for a possible interest rate adjustment of up to 50 basis points (bps) and sustained hawkish commentaries from the Fed,” he said.

Unicapital Securities, Inc. Equity Research Analyst Neil Andrew L. Maderaje said in a Viber message that the PSEi rose to the 6,800 resistance level amid “a healthy P7.8-billion value turnover as the BSP noted that the pressure to match the Fed’s increases will be much lower.”

The Fed will hold its first policy meeting for the year on Jan. 31 to Feb. 1, while the BSP will hold its own review on Feb. 16.

US central bank officials recently said they could consider a smaller rate increase at their meeting if data confirm that the world’s largest economy is slowing.

Meanwhile, BSP Governor Felipe M. Medalla this week said they could consider a 25- or 50-bp rate hike at their meeting next month as inflation expectations need to be anchored.

Last year, the Fed hiked rates by 425 bps, while the BSP raised borrowing costs by 350 bps.

Most sectoral indices ended higher on Thursday, except for mining and oil, which lost 131.05 points or 1.13% to close at 11,445.48.

Meanwhile, property surged by 107.34 points or 3.64% to 3,048.99; financials added 36.61 points or 2.18% to close at 1,715.14; holding firms increased by 99.80 points or 1.51% to 6,676.06; industrials went up by 97.73 points or 1.01% to 9,704.61; and services rose by 16.60 points or 0.98% to end at 1,705.96.

Value turnover went down to P7.68 billion on Thursday with 1.42 billion shares changing hands from the P7.87 billion with 1.55 billion issues traded on Wednesday.

Advancers outnumbered decliners, 115 versus 67, while 48 names closed unchanged. Foreigners turned buyers on Thursday with P182.46 million in net purchases, versus the P1.06 billion in net selling seen the previous trading day.

“The PSEi would likely test the break of 6,800 level tomorrow, following the scheduled release of US December 2022 inflation rate tonight,” Unicapital Securities’ Mr. Maderaje said on Thursday.

“We see the 6,600 level as a healthy support level of the index amid current market developments,” he added. — Justine Irish D. Tabile