PSEi rallies as US Fed holds rate
LOCAL stocks rallied on Thursday as the US central bank’s decision to hold key interest rate steady brought good tidings to regional markets.
The main-share Philippine Stock Exchange index advanced by 86.93 points or 1.13 percent to close at 7,762.35.
Local investors drove the market higher while foreign investors remained net sellers for the 21st straight trading day. However, net foreign selling had declined to a modest P30 million.
At its recently-concluded meeting, the US Federal Open Market Committee (FOMC) decided to keep its key interest rate unchanged although it have clear signals it was ready to bring back rates to “normal” levels after the accommodative measures in recent years.
“It was striking that three voting members of the FOMC showed publicly that (Fed) chair (Janet) Yellen had pushed the committee too far and for too long toward her dovish preferences. Most surprising was that the third dissenting vote was from historically dovish Boston Fed president Rosengren, who has turned hawkish recently,” Citigroup said in a research note. “There has been considerable dissention among FOMC participants for some time, but chair Yellen has managed to forge a consensus with no more than one dissent at any meeting since December 2014.”
Citi assumes a slower pace of US interest rate “normalization.” It projects one rate hike this year (in December) and two in 2017. However for 2018 and 2019, Citi forecasts only two hikes a year (June and December), which would leave the federal funds rate at 1¾ and 2¼ percent by end-2018 and end-2019, respectively.
All the local market, except for the mining/oil counter, all counters surged led by the holding firm and services counters which both rose by over 1 percent.
Value turnover for the day amounted to P8.48 billion. There were 109 advancers that edged out 66 decliners while 45 stocks were unchanged.
Investors picked up shares of Globe Telecom, which rose by 4.48 percent while MPI also gained 3.5 percent.
PLDT was also up by 2 percent along with GT Capital and Megaworld.
SM Prime, the day’s most actively traded stock, gained 1.08 percent while Metrobank, Security Bank, SMIC and AEV also rose by over 1 percent.
URC, ALI, AC, JG Summit and DMCI also contributed to the day’s gains.
Notable gainers outside the PSEi include Cemex (+1.35 percent) and RRHI (+1.14 percent). Cemex is a bet on infrastructure-building in the country while RRHI is a consumer play.
On the other hand, LTG fell by 1.32 percent. Outside of the PSEi, Puregold and MWC slipped in heavy volume.
