PSEi ends at 7,000 level as Fed rate cut looms

The main index on Thursday closed above 7,000 for the first time since February 2023 as August US consumer inflation data bolstered expectations of a US Federal Reserve rate cut next week and amid strong foreign buying.

The Philippine Stock Exchange index (PSEi) rose by 1.14% or 79.79 points to end at 7,024.67 on Thursday, while the broader all shares index went up by 0.67% or 25.44 to close at 3,791.65. This was the PSEi’s best finish and was the first time it closed at the 7,000 level since it ended at 7,027.38 on Feb. 3, 2023.

“The PSEi finally closed above the 7,000 level for the first time in more than 19 months as investors reacted to a relatively favorable US August headline inflation print as well as an overnight tech-driven rally in US stock markets,” Juan Paolo E. Colet, managing director at Chinabank Capital Corp., said in a Viber message.

“The index was finally able to breach its key resistance at 7,000 after US inflation fell to its lowest level since February 2021, strengthening the case for a Fed rate cut next week,” AP Securities, Inc. Research Head Alfred Benjamin R. Garcia added in a Viber message.

The US consumer price index (CPI) increased 0.2% last month after rising by a similar margin in July, the Labor department’s Bureau of Labor Statistics said, Reuters reported. The rise in the CPI was in line with economists’ expectations.

In the 12 months through August, the CPI advanced 2.5%. That was the smallest year-on-year rise since February 2021 and followed a 2.9% increase in July.

Financial markets saw a roughly 15% probability of a 50-basis-point rate cut at the Fed’s Sept. 17-18 policy meeting, down from 29% before the CPI data was published, according to CME Group’s FedWatch Tool. The odds of a quarter-point rate reduction were around 85%, up from 71% earlier.

Philippine stocks climbed amid “a wave of foreign buying interest,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

Net foreign buying rose to PHP 348.48 million on Thursday from PHP 340.59 million on Wednesday.

All sectoral indices rose on Thursday. Property climbed by 1.4% or 39.12 points to 2,829.83; services rose by 1.28% or 28.53 points to 2,248.74; holding firms went up by 1.16% or 67.69 points to 5,875.02; industrials added 0.63% or 58.92 points to end at 9,301.64; financials gained 0.58% or 12.53 points to close at 2,157.59; and mining and oil increased by 0.35% or 27.56 points to 7,832.18.

Value turnover went down to PHP 5.46 billion on Thursday with 1.05 billion shares changing hands from the PHP 8.02 billion with 926.84 million shares traded on Wednesday.

Decliners outnumbered advancers, 107 versus 90, while 60 names closed unchanged.

“We’re fairly confident that the index will be able to hold above this level, especially with corporate fundamentals and macroeconomic indicators looking good so far,” Mr. Garcia said.

“If the 7,000 breakout is sustained in the next few days, the market may attempt to hurdle the next resistance at 7,100,” Mr. Colet added. — S.J. Talavera with Reuters