Shares rise on expectations of smaller rate hikes

STOCKS closed in the green on Tuesday as market sentiment improved on easing worries over the banking sector and expectations of smaller rate hikes from central banks in the Philippines and in the United States.

The benchmark Philippine Stock Exchange index (PSEi) increased by 79.73 points or 1.23% to close at 6,530.75 on Tuesday, while the broader all shares index rose by 36.84 points or 1.06% to end at 3,493.50.

“Local shares bounced back on Tuesday, taking cues from US equities that rebounded overnight as markets calmed down days after fears of financial stress… Investors are pinning hopes that the current banking crisis fades and the world evades an economic downturn,” said Papa Securities Corp. Equities Strategist Manny P. Cruz said in a Viber message.

US stocks jumped on Monday after a deal to rescue Credit Suisse and central bank efforts to bolster confidence in the financial system relieved investors, while participants also weighed the likelihood of a pause in rate hikes from the US Federal Reserve this week, Reuters reported.

The Dow Jones Industrial Average rose by 382.60 points or 1.2% to 32,244.58; the S&P 500 gained 34.93 points or 0.89% to end at 3,951.57; and the Nasdaq Composite added 45.02 points or 0.39% to close at 11,675.54.

“Philippine shares managed to climb above the 6,500 level in the green after a forced takeover of Credit Suisse by UBS, which was engineered by the Swiss government… Investors now expect a slower pace of tightening from the Fed in light of the banking crisis,” Regina Capital Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Back home, investors remain optimistic ahead of the MB’s (Monetary Board) policy meeting on March 23. Finance Secretary Benjamin E. Diokno said recent global developments may prompt central banks all over the world to slow the pace of rate hikes. Thus, he said the only options are to hike by 25 basis points or to keep rates unchanged on Thursday,” Mr. Limlingan added.

The Fed will hold its second policy meeting for the year on March 21-22, while the Bangko Sentral ng Pilipinas’ review is on March 23.

All sectoral indices closed higher on Tuesday. Services climbed by 30.50 points or 1.95% to 1,591.99; mining and oil increased by 153.91 points or 1.46% to 10,667.15; financials went up by 23.01 points or 1.3% to 1,787.79; property rose by 31.85 points or 1.16% to 2,763.33; holding firms gained 67.35 points or 1.06% to end at 6,368.45; and industrials added 67.26 points or 0.71% to close at 9,417.17.

Value turnover dropped to PHP 4.78 billion on Tuesday with 545.92 million shares changing hands from the PHP 5.63 billion with 714.81 million issues traded on Monday.

Advancers outnumbered decliners, 109 versus 69, while 43 names closed unchanged.

Net foreign selling stood at PHP 33.74 million on Tuesday versus the net buying worth PHP 89.62 million seen on Monday. — A.H. Halili with Reuters