Stocks climb further as inflation slows sharply

Philippine shares closed higher for the third straight day on Tuesday following the release of data showing that inflation slowed sharply in January.

The Philippine Stock Exchange index (PSEi) climbed by 27.04 points or 0.4% to close at 6,755.26 on Tuesday, while the broader all shares index rose by 13.91 points or 0.39% to end at 3,539.05.

“This Tuesday, the local market rose by 27.04 points (0.4%) to 6,755.26 as investors cheered the inflation data for January, which came in at 2.8%,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.

“Philippine shares managed to overcome the weaker sentiment from the US, as inflation fell below the 3% mark in January, giving the BSP (Bangko Sentral ng Pilipinas) more room to maneuver its interest rate policy,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Headline inflation slowed to 2.8% in January from 3.9% in November and 8.7% a year ago, the Philippine Statistics Authority reported on Tuesday.

This was the slowest print recorded in three years or since the 2.3% seen in October 2020, during the coronavirus pandemic.

The January consumer price index (CPI) was below the 3.1% median estimate in a BusinessWorld poll last week and was at the lower end of the BSP’s 2.8-3.6% forecast for the month.

It also marked the second straight month that the CPI was within the central bank’s 2-4% annual target.

Following the data release, the BSP said the Monetary Board will keep its policy stance “sufficiently tight until a sustained downtrend in inflation becomes evident,” noting that risks remain tilted to the upside despite slower January CPI.

The BSP raised benchmark interest rates by 450 basis points from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.

The Monetary Board will hold its first policy meeting for the year on Feb. 15.

“Adding to the positive sentiment was the report from Moody’s Analytics wherein it sees the Philippine economy performing better in the second half of the year amid cooling inflation and declining interest rates,” Mr. Plopenio added.

Almost all sectoral indices closed higher on Tuesday. Services increased by 19.27 points or 1.16% to 1,676.18; property went up by 20.75 points or 0.71% to 2,916.06; holding firms climbed by 39.38 points or 0.62% to 6,379.59; mining and oil rose by 32.14 points or 0.35% to 9,143.72; and industrials added 22.05 points or 0.24% to end at 9,134.08.

Meanwhile, financials dropped by 9.05 points or 0.46% to 1,928.25.

Value turnover went down to PHP 4.76 billion on Tuesday with 749.46 million issues switching hands from the PHP 5.26 billion with 425.46 million shares traded the previous day.

Advancers and decliners ended at 93 each, while 57 names closed unchanged.

Net foreign buying fell to PHP 44.45 million on Tuesday from the PHP 127.83 million recorded on Monday. — R.M.D. Ochave