Stocks rebound as US CPI eases slightly in February

PHILIPPINE SHARES rebounded on Wednesday as US consumer inflation eased slightly last month, helping offset investor fears due to recent bank failures in the world’s largest economy.

The bellwether Philippine Stock Exchange index (PSEi) went up by 72.77 points or 1.13% to end at 6,466.10 on Wednesday, while the broader all shares index rose by 24.04 points or 0.69% to 3,478.52.

“The market rebounded as interest rate concerns eased. Investors cheered the latest US inflation data, which showed a slowdown in both sequential and annualized price increases. This, combined with the latest developments on the US banking industry, raises the chance of a less aggressive US Federal Reserve stance on interest rates,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

“Philippine shares snapped their five-day losing streak as investors shook off fears that recent banking turmoil would spread to the broader sector. In other news, the consumer price index (CPI) for February also came in line with expectations, showing a 0.4% increase from January,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The US CPI rose 0.4% last month after climbing by 0.5% in January.

In the 12 months through February, the CPI increased 6%, which was the smallest year-on-year gain since September 2021. Consumer inflation rose 6.4% annually in January.

Fed Chair Jerome Powell told lawmakers last week that the US central bank would likely need to raise rates more than expected, leading financial markets to expect that a half-percentage-point rate increase was on the table next week, Reuters reported.

But those expectations were dialed back to 25 basis points after Friday’s employment showed a still-tight labor market, but cooling wage inflation.

“The local bourse bounced after the inflation rate in the US eased in February, while at home, the Bangko Sentral ng Pilipinas calmed down investors by saying that Philippine banks have no exposure to Silicon Valley Bank,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said.

Sectoral indices were split on Wednesday. Industrials added 164.07 points or 1.76% to end at 9,474.58; financials went up by 29.39 points or 1.66% to 1,794.10; and holding firms rose by 90.69 points or 1.47% to 6,232.20.

Mining and oil declined by 54.85 points or 0.51% to 10,552.83; property went down by 11.95 points or 0.43% to 2,723.06; and services fell by 1.13 points or 0.07% to 1,577.99.

Value turnover went up to PHP 11.07 billion on Tuesday with 1.19 billion shares changing hands from the PHP 6.78 billion with 968.01 million issues traded on Tuesday.

Advancers outnumbered decliners, 103 versus 80, while 48 names closed unchanged.

Net foreign selling went up to PHP 4.78 billion on Wednesday from the PHP 1.05 billion seen on Tuesday.

AB Capital Securities’ Mr. Vistan placed the PSEi’s immediate support at 6,400 and resistance at 6,660. — Ashley Erika O. Jose with Reuters