EconomyEditor's PickStocks inch up ahead of central bank meetings

September 20, 2022

SHARES inched higher on Tuesday to end a five-day decline on bargain hunting ahead of the monetary policy meetings of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP), where markets expect further tightening.

The benchmark Philippine Stock Exchange index (PSEi) edged up by 11.04 points or 0.17% to close at 6,448.46 on Tuesday, while the broader all shares index rose by 6.74 points or 0.19% to 3,432.74.

“Philippine shares ended the day with a modest rebound ahead of another rate hike from the Fed,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The FOMC (Federal Open Market Committee) will kick off its two-day meeting on Tuesday. The streets bet that the central bank will adjust the benchmark rate by 75 bps (basis points) on Wednesday. Meanwhile, Moody’s Analytics sees the BSP to stay with its aggressive fight against soaring inflation,” Mr. Limlingan said.

Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message that the PSEi climbed as investors hunted for bargains near the 6,400 support levels.

“Along with other markets, the local bourse also took cues from the US markets’ positive performance overnight,” Ms. Alviar added.

Wall Street closed the session higher on Monday as investors turned their attention to the Fed’s policy meeting. The Dow Jones Industrial Average rose by 197.26 points or 0.64% to close at 31,019.68; the S&P 500 gained 26.56 points or 0.69% to 3,899.89; and the Nasdaq Composite added 86.62 points or 0.76% to end at 11,535.02. 

The Fed is meeting from Sept. 20-21 to review its policy settings, and markets expect it to deliver another hefty rate hike to rein in rising inflation. The US central bank has raised rates by 225 bps since March, including two 75-bp hikes in June and July.

Meanwhile, at home, the BSP will hold its own review on Sept. 22, with analysts betting on a 50-bp increase. It has increased borrowing costs by 175 bps since May amid sustained price pressures.

Most sectoral indices closed higher on Tuesday except for holding firms, which declined by 24.53 points or 0.39% to 6,169.58.

Meanwhile, financials went up by 12.60 points or 0.79% to 1,592.57; mining and oil climbed by 44.67 points or 0.39% to 11,256.33; industrials gained 29.10 points or 0.31% to end at 9,416.61; services increased by 3.64 points or 0.21% to 1,673.24; and property inched up by 1.57 points or 0.05% to close at 2,876.90.

Advancers outnumbered decliners, 94 to 82, while 55 names closed unchanged.

Value turnover went down to P4.75 billion on Tuesday with 401.19 million shares changing hands from the P4.98 billion with 660.59 million issues traded on Monday.

Net foreign selling also declined to P191.98 million on Tuesday from the P286.62 million recorded the previous trading day.

Regina Capital’s Mr. Limlingan said aside from the central bank meetings, the market will also monitor US housing data set to be released overnight for trading leads. — J.I.D. Tabile

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