PSEi extends climb on Fed, BSP rate cut hopes

PHILIPPINE SHARES closed higher on Wednesday on hopes of monetary policy easing by the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) amid expectations of easing inflation.

The bellwether Philippine Stock Exchange index (PSEi) increased by 27.82 points or 0.42% to close at 6,630.97 on Wednesday, while the broader all shares index rose by 9.80 points or 0.27% to end at 3,529.66.

“The market is on the eve of a gradual recovery as Fed and BSP interest rate cut hopes fuel return of risk-on mood. Inflation is expected to temper this month from peaks early this year,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.

The Fed last week raised interest rates by 25 basis points (bps) to the 4.75%-5% range, but Fed Chair Jerome H. Powell said they could consider a pause soon due to turmoil in the US banking system. Still, he kept the door open for further increases if necessary.

The US central bank has hiked rates by 475 bps since March 2022. Its next review is on May 2-3.

Meanwhile, the BSP last week increased borrowing costs by 25 bps as inflation remains elevated, bringing its key rate to 6.25%.

Since May 2022, the central bank has raised rates by 425 bps.

BSP Governor Felipe M. Medalla earlier said that if March inflation eases further from February’s 8.6%, the Monetary Board may consider a pause at its next policy meeting on May 18.

March inflation data will be released on April 5.

“Philippine shares managed to close higher even as investors became wary that higher interest rates could tip the economy into a recession, even as Wall Street tried to move past this month’s regional banking crisis,” said Regina Capital Development Corp. Head of Sales, Luis A. Limlingan in a Viber message.

“On the economic front, traders are awaiting the latest pending home sales data that’s set to release Wednesday after the open,” Mr. Limlingan added.

On Tuesday, the Dow Jones Industrial Average fell 37.83 points or 0.12% to 32,394.25; the S&P 500 lost 6.26 points or 0.16% to 3,971.27; and the Nasdaq Composite dropped 52.76 points or 0.45% to 11,716.08.

Back home, almost all sectoral indices closed higher on Wednesday, except for industrials, which fell by 54.04 points or 0.56% to 9,492.48.

Meanwhile, financials rose by 20.17 points or 1.13% to 1,800.32; property went up 14.29 points or 0.51% to close at 2,797.17; holding firms increased by 26.66 points or 0.41% to close at 6,449.73; mining and oil climbed by 34.16 points or 0.31% to 10,970.47; and services gained 0.18 point or 0.01% to end at 1,649.31.

Value turnover surged to PHP 13.01 billion on Wednesday with 2.29 billion shares changing hands from the PHP 5.34 billion with 911.1 million issues traded on Tuesday.

Decliners outnumbered advancers, 100 versus 76, while 55 names closed unchanged.

Net foreign buying went up to PHP 2.70 billion on Wednesday from the PHP 725.13 million seen on Tuesday. — A.H. Halili