PSEi firms up on Fed stance

The local stock barometer firmed up on Thursday, tracking upbeat global markets after dovish signal accompanied the US Federal Reserve’s widely-expected 25-basis point rate hike.

The Philippine Stock Exchange index gained 24.81 points or 0.34 percent to close at 7,278.60, driven mostly by risk-taking among domestic investors.

“The FOMC (Federal Open Market Committee) raised rates by 25 basis points as expected, but failed to validate market fears of a faster pace of tightening. This was as dovish a hike as could have been expected, especially as the median of the ‘dot-plot’ was effectively unchanged, and with (Fed) chair (Janet) Yellen stressing at the press conference that policy will remain accommodative for now, that the neutral real policy rate may even be zero at this time, that improved sentiment was still not seen to accelerate consumer or business spending, and clarifying that the Fed’s 2 percent inflation goal was not a ceiling but a ‘symmetric’ target,” Citigroup said in a research note.

Citi said this “mild” Fed stance would likely dispel the fear that a stronger dollar or higher US rates would pose a headwind to emerging markets (EM).

“Instead, recent indications of a broadening and strengthening of the EM recovery, especially in Asia’s more manufacturing-export economies, is likely to now become the principal driver of investment decisions. While some risks remain — especially from European political developments — for now emerging markets may have a reasonably clear path to outperform over the next few weeks,” Citi said.
At the local market, the day’s gains were led by the financial, industrial, holding firm, services and property counters.

Only the mining/oil counter ended lower.

Value turnover for the day amounted to P6.14 billion. Domestic investors drove the market higher as there was P120 million in net foreign selling for the day.

There were 102 advancers that edged out 76 decliners while 47 stocks were unchanged.

The PSEi was led higher by ICTSI, which rose by 3.87 percent while URC gained 1.21 percent.

BDO, SM Prime, Ayala Corp., Ayala Land, Metrobank and AEV all firmed up.

On the other hand, Semirara slipped by 2.19 percent while Puregold, PLDT and DMCI all tumbled by over 1 percent.

GT Capital and MPI also slipped.