Stocks rebound as inflation sharply slows in April

Philippine stocks rebounded on Tuesday as headline inflation slowed to an over five-year low in April, paving the way for further monetary easing.

The bellwether Philippine Stock Exchange index (PSEi) climbed by 0.92% or 59.06 points to end at 6,418.69, while the broader all shares index increased by 0.72% or 26.86 points to 3,746.12.

“The local market bounced back as investors cheered the Philippines’ April inflation rate which came in at 1.4%, lower than the preceding month’s 1.8%,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “The low inflation figure is seen to give the Bangko Sentral ng Pilipinas (BSP) more room to ease their policy.”

“Philippine shares managed to resume their gains driven by the better-than-expected consumer price index (CPI) and more earnings releases,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The April CPI was the lowest since the 1.2% logged in November 2019 amid moderating oil and food prices.

This was within the 1.3% to 2.1% forecast of the Bangko Sentral ng Pilipinas for the month and well below the 1.8% median estimate in a BusinessWorld poll of 14 analysts.

For the first four months, headline inflation averaged 2%, at the low end of the BSP’s 2-4% annual target.

BSP Governor Eli M. Remolona, Jr. said on Monday that cooling inflation gives the central bank “a lot of policy space.”

The Monetary Board last month resumed its easing cycle after an unexpected pause in April, cutting benchmark borrowing costs by 25 basis points (bps) to bring the policy rate to 5.5%. Its next meeting is on June 19.

Mr. Remolona earlier said they are likely to reduce rates further this year in “baby steps” of 25 bps at a time.

Almost all sectoral indices closed higher on Tuesday. Services rose by 3.52% or 69.64 points to 2,048.16; mining and oil went up by 2.62% or 248.49 points to 9,705.38; industrials increased by 0.64% or 57.96 points to 8,989.78; holding firms climbed by 0.55% or 29.50 points to 5,387.18; and property inched up by 0.05% or 1.30 points to 2,300.97.

Meanwhile, financials declined by 0.16% or 4.14 points to 2,458.45.

“Bloomberry Resorts Corp. was the top index gainer, jumping 9.97% to PHP 4.19. Semirara Mining and Power Corp. was the main index loser, dropping 1.36% to PHP 32.55,” Mr. Tantiangco said.

Value turnover increased to PHP 6.15 billion on Tuesday with 876.09 million shares traded from the PHP 5.67 billion with 699.74 million issues exchanged on Monday.

Advancers edged out decliners, 97 versus 95, while 46 names closed unchanged.

Net foreign buying stood at PHP 690.87 million on Tuesday, a turnaround from the PHP 77.41 million in net selling recorded on Monday. — Revin Mikhael D. Ochave