PSEi rises to 5,700 range on easing Fed hike bets

Shares returned to the 5,700 level on Monday as soft US labor data eased expectations for another US Federal Reserve hike this month, with investors also awaiting the release of the September Philippine inflation report.

The bellwether Philippine Stock Exchange index (PSEi) surged by 2.03% or 114.18 points to close at 5,743.21, while the broader all shares index went up by 1.46% or 45.87 points to end at 3,198.26.

This was the PSEi’s biggest single-day gain since Sept. 1, when it rose by 2.31% or 132.04 points to finish at 6,093.81.

“The PSEi returned to positive territory to start the week, closing about 2% higher as late market-on-close buying lifted the index. Sentiment was also supported by reduced expectations for an October Fed rate hike following softer-than-expected US jobs data. However, turnover remained light at just PHP 3.7 billion, with buying largely selective ahead of the start of Mynt’s retail offer this week,” COL Financial Group, Inc. Research Analyst Denise Joaquin said in a Viber message.

Data last week showed US job growth slowed more than expected in September and the nonfarm payrolls count for the prior two months was revised sharply lower, which investors believed would almost take another rate hike from the Fed this month off the table, Reuters reported.

Investors are now pricing in less than a 20% chance that the Fed could raise rates this month, as compared to a 64% chance a week ago, according to the CME FedWatch tool. But traders still expect a hike in December.

“The PSEi ended higher as buying pressure emerged, particularly among index heavyweights, following five consecutive sessions of declines. Investors took advantage of relatively cheaper valuations after the recent sell-off. Sentiment was also supported as investors likely positioned ahead of tomorrow’s inflation print release,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

A BusinessWorld poll of 22 analysts yielded a median estimate of 6.7% for September inflation, faster than 6.1% in August and 1.7% a year ago. This is within the central bank’s 6.4%-7.4% forecast for the month.

Most sectoral indices ended higher. Services rose 4% or 120.52 points to 3,136.05; industrials climbed 1.28% or 94 points to 7,428.99; mining and oil went up 1.21% or 234.75 points to 19,566.95; holding firms advanced by 1.11% or 45.16 points to 4,129.61; and property gained 1.75% or 30.36 points to 1,765.72. Meanwhile, financials slipped by 0.07% or 1.28 points to 1,758.11.

Decliners outnumbered advancers, 95 versus 85, while 77 names were unchanged.

Value turnover declined to PHP 3.74 billion on Monday with 414.32 million shares traded from the PHP 8.18 billion with 840.22 million issues traded on Friday.

Net foreign buying stood at PHP 134.20 million, a turnaround from the net selling worth PHP 1.25 billion recorded previously. — Alexandria Grace C. Magno