Stocks surge as US Fed race narrows

Philippine stocks rallied on Monday, after showing strength during most of the session, as the rest of the region cheered changes in the race for chairmanship of the influential US Federal Reserve, and its implications on US monetary policy.

The benchmark Philippine Stock Exchange Index surged 2.76 percent, or 169.47 points, to 6,302.71 on Monday. The broader all shares index also increased 1.72 percent to 3,802.43.

All sub-indices closed in the green except for mining and oil’s 0.61-percent dip. The sector continues to be affected by uncertainties over the Aquino administration’s review of the state’s mining policy, including issues on revenue-sharing.

Leading sub-indices were holding firms, up 3.69 percent, property, up 3.31 percent, and financials, up 2.57 percent.

“In general markets in Asia are up because of an upgrade in China and news on the taper,” Joseph Roxas, president of  Eagle Equities Inc., said in an interview.

International media on Monday

reported that former White House economic adviser Lawrence Summers dropped out of the race to be the next Federal Reserve chair; the seat is presently occupied by Ben Bernanke.

The decision means Janet Yellen is now the front runner for the post. Pundits say she is more accommodative of a slower reduction of monetary stimulus, a policy that has bolstered financial markets around the world.

Roxas described Monday’s performance as a strong bounce. However, he said the local stock market remains in consolidation mode.

“I think it can go up to 6,400, then maybe 6,700 then drop again,” Roxas said. He noted that the benchmark measure would likely close below 7,000 this year. Miguel R. Camus