Index bounces back over 3,000 points on Fed rate hike

MANILA, Philippines - Local stocks climbed back above the 3,000-point mark yesterday, recovering from last Friday’s tumble when the US central bank decided to pull back one of its emergency supports for the financial system, as investors took a second look at the Federal Reserve’s decision and decided it boded well for the US economy.

All over Asia, investors were initially unnerved by the unexpected move Thursday to raise rates on emergency bank lending, fearing it could derail recovery in the world’s largest economy.

The Philippine Stock Exchange Index (PSEi) surged 37.06 points or 1.24 percent to close at 3,015.59 while the broader All Shares Index also advanced 16.19 points or 0.86 percent to 1,906.76.

“Investors’ confidence recovered after the global markets showed resilience even after the increase in the US Fed’s discount rate on emergency loans. Instead of being negative, investors viewed the rate increase positively. The action was interpreted as a move that recognized a strengthening economy for the US,” AB Capital Securities said on its website.

Primarily responsible for the PSEi’s gains were blue chips Philippine Long Distance Telephone Co. (PLDT) and Ayala Land Inc., accounting for almost half of the main index’s gains for the day.

All major sub indices were also in the green, led by the property index’s gain of 2.71 percent. Market breadth was bullish as advancers beat out decliners 64 to 25 while 63 issues were unchanged.

AB Capital said with the market’s recovery, “we have managed to bounce back above the important 50-day exponential moving average.”

“However, it remains unclear whether the market has recovered and is poised to resume its recently interrupted medium term rally. Our view is that the market will mostly likely consolidate in the coming sessions.,” it said.

“It is uncertain if the market can consolidate its position above 3,000 as recent attempts have not proven successful. As it is the market remains vulnerable to external factors, particularly to continuing developments in the global economy,” BPI Securities said in a similar online report.      – With AP