PHL shares rise further on rate cut expectations

PHILIPPINE SHARES climbed further on Tuesday amid expectations of more rate cuts by the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

The Philippine Stock Exchange index (PSEi) rose by 0.2% or 14.96 points to close at 7,432.21 on Tuesday, while the broader all shares index increased by 0.13% or 5.48 points to end at 3,963.50. This was a fresh 31-month high for the PSEi as this was its best finish since 7,440.91 on Feb. 22, 2022.

“Investors took cues from Wall Street’s record performance overnight, driven by optimism towards the Fed’s monetary policy stance,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Positive sentiment towards the policy outlook of the Bangko Sentral ng Pilipinas also helped in maintaining the upward momentum.”

US stocks closed modestly higher on Monday, Reuters reported. The Dow Jones Industrial Average rose 61.29 points or 0.15% to 42,124.65; the S&P 500 gained 16.02 points or 0.28% to 5,718.57; and the Nasdaq Composite gained 25.95 points or 0.14% to 17,974.27.

Comments on Monday from three reserve bank presidents were the main focus as investors searched for clues on why the central bank kicked off its easing cycle with an outsized 50-basis-point (bp) cut.

Fed officials including Raphael Bostic, Neel Kashkari, and Austan Goolsbee supported the central bank’s last rate cut and voiced support for more cuts for the rest of the year.

Meanwhile, Finance Secretary Ralph G. Recto, who sits on the central bank’s Monetary Board, said on Tuesday the monetary authority can afford to slash interest rates further and match the size of the US Federal Reserve’s rate cut.

Slowing inflation allowed the central bank to cut its benchmark borrowing rate by 25 bps to 6.25% in August, its first rate cut since November 2020, ahead of major central banks, including the Fed.

BSP Governor Eli M. Remolona, Jr. had earlier flagged there was room for one more interest rate cut this year. The BSP’s next meeting is on Oct. 17.

“Local shares rose on Tuesday, supported by the BSP’s reserve requirement cut and China’s new stimulus measures,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.

Majority of sectoral indices closed higher on Tuesday. Property rose by 0.95% or 28.22 points to 2,989.96; financials went up by 0.43% or 10.30 points to 2,372.48; industrials increased by 0.09% or 8.81 points to 9,756.33; and mining and oil climbed by 0.05% or 4.91 points to 8,532.13.

Services dropped by 0.61% or 13.96 points to 2,250.79; and holding firms went down by 0.02% or 1.73 points to 6,295.96.

Value turnover improved to P11.79 billion on Tuesday with 1.02 billion issues switching hands from the P8.72 billion with 698.15 million shares traded on Monday.

Advancers narrowly beat decliners, 102 versus 100, while 57 names closed unchanged.

Net foreign buying surged to P2.99 billion on Tuesday from P1.77 billion on Monday. — R.M.D. Ochave with Reuters