Shares inch higher on Fed bets, peso’s rebound

Philippine shares edged higher Thursday as bargain hunting continued and as the peso rose further against the dollar, with positive sentiment from Wall Street on expectations of more rate cuts spilling over to the local market.

The Philippine Stock Exchange index (PSEi) inched up by 0.22% or 13.73 points to close at 6,039.76, while the broader all shares index rose by 0.12% or 4.67 points to end at 3,659.29.

“The local market extended its gains as investors continued with their bargain hunting. The positive cues from Wall Street driven by Federal Reserve rate cut hopes helped in Thursday’s session,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a market note.

“The slight improvement in the peso’s position also aided the local bourse,” he said. The peso rose by four centavos to close at PHP 58.080 against the dollar on Thursday from PHP 58.12 on Wednesday, marking a second day of gains.

A weak US labor market report bolstered bets for US Federal Reserve interest rate cuts, Reuters reported. The US government shutdown made it a near certainty that crucial monthly payrolls data won’t be released on Friday, but overnight the private ADP employment report showed the economy unexpectedly shed jobs in September, with the prior month also revised to a decline.

Even without the benefit of official labor data, the dismal ADP report had traders pricing in quarter-point Fed rate cuts at each of the two remaining policy meetings of the year as almost a done deal. The promise of an easier policy environment helped lift Wall Street to fresh record highs on Wednesday.

Meanwhile, AP Securities, Inc. said in a market note that the PSEi managed to stay above 6,000 mainly on the back of a 2.03% jump from index heavyweight SM Investments Corp.  (SMIC).

SMIC was the index’s leader for the day, while SM Prime Holdings, Inc. was the main laggard as it dropped by 2.18%, Mr. Tantiangco noted.

“Trading was still tepid, however, … reflecting the weak market confidence amid lingering uncertainties,” he added.

Value turnover went down to PHP 5.56 billion on Thursday with 1.52 billion shares traded from Wednesday’s PHP 6.8 billion with 2.46 billion shares changing hands.

Most sectoral indices closed higher on Thursday. Mining & oil jumped by 2.2% or 291.86 points to 13,538.53; holding firms climbed by 1.26% or 61.86 points to 4,972.31; financials rose by 0.43% or 9.09 points to 2,081.86; industrials increased by 0.11% or 10.39 points to 8,892.69; and services edged up by 0.01% or 0.39 point to 2,194.03.

Meanwhile, property went down by 1.2% or 27.66 points to 2,275.13.

Decliners outnumbered advancers, 95 to 89, while 65 names closed unchanged.

Net foreign selling went down to PHP 762.04 million on Thursday from PHP 1.03 billion on Wednesday. — Alexandria Grace C. Magno with Reuters