PSEi surges to 7,000 level on Fed policy hopes

PHILIPPINE SHARES climbed on Monday amid Wall Street’s rise last week and a stronger peso amid expectations of smaller rate hikes from the US Federal Reserve.

The 30-member Philippine Stock Exchange index (PSEi) went up by 93.94 points or 1.35% to 7,045.48 on Monday, while the broader all shares index rose by 37.53 points or 1.03% to end at 3,675.15.

This was the first time the PSEi closed at the 7,000 level since April 25, 2022. It was also its best finish since the 7,061.49 close recorded on April 21, 2022.

“The uplift in the market was provided by US shares closing at the highest in a month, with the S&P 500 ending within a whisker of 4,000,” First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said in a Viber message.

Philstocks Financial, Inc. Research Analyst Claire T. Alviar said the market surged on Monday amid expectations that the Fed will be less aggressive following slower consumer inflation in December.

“The strengthening of the peso against the dollar lifted the market as well,” she added.

The S&P 500 and Nasdaq finished at their highest levels in a month on Friday, Reuters reported.

The Dow Jones Industrial Average rose 112.64 points or 0.33% to 34,302.61; the S&P 500 gained 15.92 points or 0.4% to 3,999.09; and the Nasdaq Composite added 78.05 points or 0.71% to 11,079.16.

The S&P 500 closed at its highest level since Dec. 13, while the Nasdaq closed at its highest level since Dec. 14.

The consumer price index and other recent data have bolstered hopes that a sustained downward trend in inflation could give the Fed room to dial back on its interest rate hikes.

The US central bank raised borrowing costs by 425 basis points last year, which brought the federal funds rate to 4.25-4.5%. It will hold its first policy review for this year from Jan. 31 to Feb. 1.

Fed hike hopes also helped boost the peso against the dollar. The local unit closed at PHP 54.575 versus the greenback on Monday, an over six-month high.

Most sectoral indices closed higher on Monday except mining and oil, which went down by 80.18 points or 0.69% to 11,457.63, and services, which slipped by 1.79 points or 0.1% to 1,725.26.

Meanwhile, financials gained 50.12 points or 2.79% to 1,841.46; holding firms added 163.03 or 2.43% to end at 6,870.52; property went up by 11.21 points or 0.36% to 3,063.99; and industrials increased by 32.24 points or 0.32% to end at 10,005.80.

Value turnover went up to PHP 10.23 billion on Monday with 1.11 billion shares changing hands from the PHP 9.24 billion with 1.63 billion issues traded on Friday.

Advancers outnumbered decliners, 138 versus 65, while 46 names closed unchanged.

Net foreign buying climbed to PHP 1.08 billion on Monday from the PHP 706.98 million seen on Friday.

FMIC’s Ms. Ulang placed the PSEi’s support at 6,700 and resistance at 7,100. — J.I.D. Tabile with Reuters