Philippine stocks rebounded Monday, but the peso fell as investors anticipate a slower US inflation rate that may lead the Federal Reserve to cut its interest rates.
The 30-company Philippine Stock Exchange index jumped 92.32 points, or 1.42 percent, to close at 6,604.25, while the broader all-shares index added 30.63 points, or 0.88 percent, to reach 3,507.76.
Regina Capital Development Corp. head of sales Luis Limlingan said investors were hoping for slower US inflation rate which could fuel hopes for an earlier US rate cut.
The peso depreciated to 57.86 against the US dollar Monday from 57.42 on March 10, data from the Bankers Association of the Philippines (BAP) showed.
Philstocks Financial Inc. research analyst Claire Papa said the local equities recovered following two consecutive days of decline. Papa said investor sentiment was boosted by the strong February foreign direct investments.
Foreign direct investments amounted $1.4 billion, up 29.2 percent year-on-year in February, boosting year-to-date FDIs to $2.3 billion.
Meanwhile, the share price of mining firm OceanGold Philippines Inc. declined 6.2 percent on its first trading day to close at P12.50 from its initial public offering price of P13.34.
Philippine Stock Exchange president Ramon Monzon congratulated the company for its successful P6.08-billion initial public offering. OceanGold is first company to list on the stock exchange this year and the first miner to do an IPO in 12 years.
“OGP’s listing comes at a time when prospects for the mining industry are favorable. The government is looking to revitalize the mining industry to boost its potential contribution to the economy. The local mining sector certainly has a vast potential that can fuel economic growth,” Monzon said.
Meanwhile, Asian equities fluctuated Monday with traders taking a breather after the past weeks’ healthy run as they absorbed weak Chinese data and news that Beijing planned to start selling almost $140 billion of bonds to boost the stuttering economy.
Reports that the White House planned to ramp up tariffs on clean energy products from China, a sharp drop in US consumer confidence and a pick-up in inflation expectations weighed on sentiment as eyes turn to the release later this week of the latest consumer price index (CPI).
The readings follow a recent rally across world markets fueled by optimism that the US Federal Reserve and other major central banks will soon cut interest rates.
The week was set to begin on a tepid note after figures showed a drop in a broad measure of credit in China that sparked worries of a further slackening in the world’s number two economy.
That came as the Wall Street Journal reported that the White House is looking at almost quadrupling tariffs on Chinese electric vehicles as part of a plan that will also target batteries and solar cells.
A decision, expected on Tuesday according to reports, would come as US President Joe Biden gears up for a rematch with Donald Trump in November’s presidential election.
Last month, Biden urged for a tripling of tariffs on steel and aluminum as he courted blue-collar voters.
Still, analysts said the decision on EVs would not likely have much impact on China’s growth as the sector was not reliant on US buyers, while some said retaliatory actions were unlikely.
Investors did take some heart after it emerged that Chinese authorities were set to begin selling the first batch of almost $140 billion in sovereign bonds this week to raise cash to boost the economy.
The sale comes after leaders announced plans in March, which fanned hopes for a huge spending spree aimed at re-energizing growth.
The central government will begin issuing some 30-year bonds Friday as part of a planned sale of more than $138 billion of debt, according to a notice posted to the Finance Ministry’s website.
Other bonds with tenors of 20 years and 50 years will go on sale on May 24 and June 14, respectively.
The news came after weekend figures showing China’s CPI rose more than expected in April, marking the third straight month of gains and providing some fresh hope for the economy.
In New York, the Dow and S&P 500 rose, even as a report showed consumer sentiment tumbled in April to its lowest level since November, while a survey of inflation expectations over the next year picked up.
Investors are now keeping a close eye on the US CPI, which is due Wednesday and will be pored over for an idea about the Fed’s plans. The reading comes after three straight months of forecast-beating readings that have seen a whittling away of rate cut expectations.
Meanwhile, Dallas Fed chief Lorie Logan warned she thought it too early to think about any reductions, while Governor Michelle Bowman did not foresee any this year.
“As long as the labor market remains tight, consumer resilience could continue to dampen hopes of inflation cooling off,” Subadra Rajappa, at Societe Generale in New York, said.
“A resumption of the disinflationary trend is imperative for the Fed to consider cutting this year.”
Discussion on the US rate outlook comes as expectations rise that the European Central Bank and Bank of England are planning to cut in the summer.
Asian markets were mixed, with Hong Kong, Singapore, Taipei, Manila and Jakarta all higher, while Sydney, Seoul and Bangkok were flat. Tokyo, Shanghai, Wellington and Mumbai fell.
London edged up in the morning though Paris and Frankfurt dipped. All three had ended Friday at record highs. With AFP
