THE LOCAL stock barometer rallied back to the 6,900 level on Thursday as a knee-jerk reaction to the well-telegraphed move by the US Federal Reserve to raise interest rates for the first time in nearly a decade.
The Philippine Stock Exchange index gained 97.98 points or 1.44 percent to close at 6,905.70 as global markets welcomed the US Fed’s quarter-percentage rate hike, seen as a vote on confidence on the resilience of the US economic recovery.
“We believe that the rally we are experiencing is only a short-term adjustment as the market is reflecting the relief that a policy change signalled earlier in the year, but was delayed, is finally on the way,” said Jose Mari Lacson, head of research at local stock brokerage Campos Lanuza & Co.
“This monetary policy tightening should result in net outflow of foreign institutional investments and weaken the peso – unless the BSP (Bangko Sentral ng Pilipinas) also follows suit and matches with its own rate hike or other policy tools,” Lacson said.
The PSEi was led higher by the financial counter which rose by 2.1 percent while the industrial and holding indices likewise rose by over 1 percent.
Only the interest rate-sensitive property counter ended in the red, weighed down by ALI which fell by 2.79 percent and was the most actively traded stock for the day.
Value turnover stood at P6.4 billion. There were 101 advancers that edged out 60 decliners while 47 stocks were unchanged.
BDO, which led the financial index higher, rose by 4.5 percent while Jollibee, Globe and DMCI all gained by over 3 percent. URC, SM Prime, RLC, MPI, SMIC and AGI all rose by over 2 percent.
Metrobank and AP both advanced by over 1 percent while PLDT also contributed modest gains.
Outside of the PSEi, the notable gainers were Berjaya (+12.83 percent) and D&L (+5.62 percent) which both rose in heavy volume.
Lacson suggested that the euphoria may not last long. “We are concerned that the market expects a linear tightening of monetary policy. This may not be the case given the dynamics involving a yuan currency policy and falling commodity prices may accelerate, decelerate, or even reverse, monetary tightening,” Lacson said.
“Bottomline, the downside risk for the market for 2016 is still there. From a Federal Reserve watch, the new phase for monitoring is a peso and China economics watch,” he said.