PSEi extends rally, ends at 2-month high

MANILA, Philippines — Traders yesterday welcomed more data showing falling US inflation, giving the Federal Reserve room to bring the curtain down on more than a year of interest rate hikes.

The benchmark Philippine Stock Exchange index (PSEi) closed at a near two-month high 6,624.79, up by 46.30 points or 0.70 percent, while the broader All Shares index gained 18.75 points or 0.54 percent to finish at 3,515.81.

Total value turnover reached P5.548 billion. Market breadth was positive, 93 to 79, while 51 issues were unchanged.

Unicapital Securities said the PSEi extended its rally as investors were encouraged by the slower-than-expected US inflation results, which raised hopes the Fed is nearing the end of its tightening cycle.

“In the near-term, we expect the upsides unlocked by the better-than-expected US inflation result to sustain a 6,500 to 6,600 range,” it said.

Global markets have been bubbling this week on hopes for an end to monetary tightening aimed at taming inflation, which was fuelled by post-COVID reopening, supply chain snarls, and Russia’s invasion of Ukraine.

That has come just as China pledges to introduce measures to kickstart its stuttering economy and bring an end to a painful crackdown on the huge tech sector.

Wall Street cheered news Thursday that wholesale prices rose less than expected in June. That followed Wednesday’s report showing the consumer price index below forecasts.

While the CPI remains above the Fed’s target, analysts said there is growing confidence that officials were winning their battle and the economy could avoid a feared recession.

“The back-to-back softer inflation prints have further convinced traders that the Fed is topping out this month as thoughts of a September hike get blotted out,” said Stephen Innes of SPI Asset Management.

However, Marvin Loh, a strategist at State Street, warned the Fed still had a battle to get inflation down to its target.

“Getting towards two percent is still going to take a lot of work,” he told Bloomberg News.