PSEi rises to 6,900 level on Fed rate cut hopes

The main index climbed to the 6,900 level anew amid positive investor sentiment as the US Federal Reserve chief said they remain on track to cut rates within the year.

The Philippine Stock Exchange index (PSEi) rose by 1.55% or 106.45 points to end at 6,963.22 on Thursday, while the broader all shares index went up by 1.2% or 43.14 points to close at 3,615.24.

“Philippine stocks surged well above the 6,900 level as the Fed reaffirmed its plan for three interest rate cuts this year. The central bank kept borrowing costs unchanged after its crucial two-day March meeting, signaling a clear direction,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Federal Reserve Chair Jerome H. Powell said on Wednesday recent high inflation readings had not changed the underlying “story” of slowly easing price pressures in the US as the central bank stayed on track for three interest rate cuts this year and affirmed that solid economic growth will continue, Reuters reported.

Speaking after a policy meeting at which officials left the benchmark overnight interest rate in the 5.25%-5.5% range and held onto their outlook for three cuts in borrowing costs this year, Mr. Powell said the timing of those reductions still depends on officials becoming more secure that inflation will continue to decline towards the Fed’s 2% target even as the economy continues to outperform expectations.

Inflation reports at the beginning of the year showed price pressures remained “elevated,” in the Fed’s view, but “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%,” Mr. Powell said in a press conference.

Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message that the PSEi ended higher as US markets climbed following Mr. Powell’s statement after the Fed’s meeting.

“Boosting the sentiment was Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr.’s statement saying that the BSP may even cut rates faster than the Fed,” Mr. Plopenio said.

Mr. Remolona on Wednesday said the BSP is “closely” watching the Fed, but noted their own policy decisions will not be dependent on the US central bank.

All sectoral indices closed higher on Thursday, led by services, which rose by 4.98% or 91.30 points to 1,922.28. Industrials went up by 1.37% or 121.99 points to 8,983.90; property climbed by 1.23% or 34.54 points to 2,836.03; mining and oil increased by 0.75% or 61.63 points to 8,213.01; financials added 0.45% or 9.26 points to end at 2,054.61; and holding firms gained 0.28% or 18.51 points to close at 6,455.30.

Value turnover went down to PHP 6.34 billion with 976.7 million issues switching hands from the PHP 8.78 billion with 786.83 million shares traded on Wednesday.

Advancers outnumbered decliners, 124 against 77, while 43 names ended unchanged.

Net foreign buying rose to PHP 433.4 million on Thursday from PHP 391.41 million on Wednesday. — R.M.D. Ochave with Reuters