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Shares rise on hopes of less aggressive rate hikes

PHILIPPINE STOCKS stayed in positive territory on Wednesday on hopes of smaller rate hikes from the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).

The Philippine Stock Exchange index (PSEi) gained 80.67 points or 1.25% to close at 6,510.32 on Wednesday, while the broader all shares index rose by 25.61 points or 0.75% to 3,415.76.

“The market has broken above a key resistance of 6,500 as risk appetite improves on the view that aggressive central banks’ interest rate hiking cycle is about to end as inflation tapers,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in an e-mail.

“The local market continued to head higher — breaching the 6,500 resistance level — due to positive sentiment spillover following the overnight rally in Wall Street on expectations that the Fed will scale back its tightening pace amid prospects of easing inflation,” China Bank Securities Corp. Research Analyst Lance U. Soledad said in an e-mail.

Mr. Soledad added that minutes of the Fed’s November meeting will be released overnight, which could provide hints on the US central bank’s next policy move.

The US central bank raised borrowing costs by 75 basis points (bps) for a fourth straight time this month, bringing the fed funds rate to a 3.75-4% range. It has hiked rates by 375 bps since March and is expected to deliver smaller increases as early as its Dec. 13-14 meeting.

Meanwhile, the BSP last week likewise increased benchmark rates by 75 bps to match the Fed and rein in rising inflation. It has hiked rates by 300 bps since May.

BSP Governor Felipe M. Medalla on Tuesday ruled out further jumbo or off-cycle increases, but said they will need to keep on raising rates as the Fed’s own tightening cycle continues. The Monetary Board’s next review will be held on Dec. 15.

AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message that the PSEi closed higher on thin trading due to a lack of leads.

All sectoral indices ended in green on Wednesday. Property surged by 72.05 points or 2.56% to 2,879.68; holding firms climbed by 95.12 points or 1.56% to 6,190.11; mining and oil went up by 119.71 points or 1.23% to 9,802.22; industrials rose by 81.22 points or 0.85% to 9,593.49; financials added 2.83 points or 0.17% to end at 1,636.21; while services gained 2.35 points or 0.14% to close at 1,658.90.

Value turnover went up to P5.88 billion on Wednesday with 802.39 million shares changing hands from the P5.39 billion with 525.99 million shares traded on Tuesday. 

Advancers outnumbered decliners, 105 versus 83, while 46 names closed unchanged.

Net foreign buying went up to P423.97 million on Wednesday from P289.03 million on Tuesday.

China Bank Securities’ Mr. Soledad placed the PSEi’s immediate support and resistance at 6,380 and 6,600, respectively; while AB Capital Securities’ Mr. Vistan put support at 6,420 and resistance at 6,550. — A.E.O. Jose

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