Stocks back above 7,200 after within-target inflation

Philippine shares rebounded to the 7,200 level on Tuesday as October inflation remained within the central bank’s annual target.

The benchmark Philippine Stock Exchange index (PSEi) rose by 1.7% or 121.84 points to close at 7,257.94 on Tuesday, while the broader all shares index increased by 1.05% or 41.85 points to end at 3,993.51.

“The local market bounced back this Tuesday as inflation remained near the lower end of the government’s 2-4% target,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Philippine shares made a huge comeback as the October consumer price index came in within expectations as at 2.3%,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Headline inflation picked up to 2.3% in October from 1.9% in September, the Philippine Statistics Authority reported on Tuesday.

Still, this was slower than the 4.9% print in the same month last year. This was also within the Bangko Sentral ng Pilipinas’ (BSP) 2%-2.8% forecast for the month and a tad below the 2.4% median estimate in a BusinessWorld poll of 11 analysts.

For the first 10 months, the consumer price index averaged 3.3%, well within the BSP’s 2-4% target for the year but above its 3.1% baseline forecast.

“Wall Street slipped Monday as investors eyed the upcoming US presidential election and a potential US Federal Reserve rate cut. The 10-year Treasury yield fell to 4.3%, signaling a shift to safe assets ahead of election day,” Mr. Limlingan added.

US stock indexes were trading flat to lower on Monday, as investors braced for a pivotal week for global markets in which Americans will elect a new president and the Federal Reserve is likely to cut its benchmark policy rate, Reuters reported.

Choppy trading is likely in the wait for the election outcome and due to a lack of clarity on the policy implications. Investors, meanwhile, remained largely sure of a 25-basis-point rate cut by the Fed in its November meeting, whose decision is expected on Thursday.

Back home, all sectoral indices closed higher on Tuesday. Property gained by 3.37% or 93.03 points to end at 2,849; financials climbed by 1.73% or 40.04 points to 2,351.13; industrials surged by 1.44% or 142.33 points to 9,970.31; services went up by 0.64% or 14.22 points to 2,204.98; holding firms increased by 0.63% or 38.42 points to 6,135.48; and mining and oil rose by 0.01% or 1.57 points to 8,488.76.

Value turnover increased to PHP 4.97 billion on Tuesday with 1.03 billion shares changing hands from the PHP 4.65 billion with 588.45 million issues traded on Monday.

Advancers outnumbered decliners, 115 versus 89, while 52 names were unchanged.

Net foreign selling dropped to PHP 58.2 million on Tuesday from PHP 777.98 million on Monday. — R.M.D. Ochave with Reuters