Shares breach 6,300 as buying interest returns

Philippine shares rebounded on Wednesday, pushing the main index to the 6,300 level, as investor sentiment improved following positive cues from overseas markets, with buying activity supported by bargain hunting.

The Philippine Stock Exchange index (PSEi) rose by 0.74% or 46.48 points to close at 6,302.50, while the broader all shares index increased by 0.54% or 18.51 points to end at 3,398.45.

This was an over four-month high and was the PSEi’s best close since March 6’s 6,320.41.

“The local bourse ended higher after two consecutive days of losses as bargain hunting lifted market sentiment. Buying interest reemerged, with investors selectively accumulating blue-chip stocks following the recent pullback,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “Gains were supported by improved risk appetite tracking global markets, although overall trading remained thin.”

“The local market bounced back, taking cues from Wall Street’s overnight rise. This comes as the US’ June inflation rate came in at 3.5%, declining from the prior month’s 4.2%. This was also lower than expectations. The below-expected inflation in the US eases worries over the Federal Reserve’s policy outlook,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

Global stocks rose and bonds steadied on Wednesday after a surprise slowdown in US inflation scaled back expectations for interest rate hikes, Reuters reported.

US consumer inflation slowed more than expected in June as energy prices retreated, but the moderation was insufficient to convince financial markets to take an interest rate increase from the US Federal Reserve this year off the table against the backdrop of renewed conflict in the Middle East.

Fed Chair Kevin M. Warsh told lawmakers on Tuesday the central bank had “no tolerance for persistently elevated inflation,” and he did not think that everything was swell after the consumer price index report. Financial markets expect the Fed to keep its benchmark overnight interest rate unchanged in the 3.5%-3.75% range this month.

Back home, majority of sector counters closed higher on Wednesday. Financials rose by 1.13% or 21.54 points to 1,922.91; services increased by 0.66% or 23.05 points to 3,467.64; property went up by 0.58% or 11 points to 1,891.86; industrials climbed by 0.48% or 39.97 points to 8,338.09; and holding firms advanced by 0.35% or 15.49 points to 4,356.82.

Meanwhile, mining and oil dropped by 0.6% or 87.23 points to close at 14,317.33.

Advancers outnumbered decliners, 96 to 88, while 63 names were unchanged.

Value turnover decreased to PHP 4.31 billion on Wednesday with 620.68 million shares traded from the PHP 5.28 billion with 673.92 million issues on Tuesday.

Net foreign buying rose to PHP 280.04 million from PHP 229.80 million in the previous session. — Alexandria Grace C. Magno with Reuters