‘Fed-driven’ trade boosts stock market

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Philippine share prices rose on Thursday after the US Federal Reserve raised interest rates, as expected.

The Philippine Stock Exchange index (PSEi) gained 97.98 points or 1.44 percent to 6,905.70, while the All Shares also added 46.75 points or 1.19 percent to 3,964.32.

Astro del Castillo, First Grade Finance Inc. managing director, said the increase was “US Fed-driven”.

“It (the rate hike) gave the market a shot in the arm. Investors flowed back to the local market because of the clearer indications of the Fed that it will raise rates gradually,” del Castillo said.


“This means the US economy also continues to get back on its feet, which is positive for global economies,” he added.

Del Castillo said there would still be a “reality check” as investors would be look for “market catalysts that would sustain the momentum.”

“For now, there’s no catalyst. Worries in China and Europe are still there. It’s a different investment environment, so most of investors will be on the sidelines,” he noted.

Regina Capital Development Corp. analyst Jason Bibit, meanwhile, said: “The market basically echoed the other major bourses abroad, which welcomed the Fed’s rate hike.”

“We don’t know if today’s rally would carry over until the end of the year, considering the multiple rate hikes lined up for next year, but at least we’re done with the first one. The age of tighter monetary policies is not yet in full swing as the European Union and Bank of Japan continue to pump their respective economies,” Bibit said.

He noted that with the Fed decision out of the way, global markets would be set for earnings-driven trading rather than liquidity.

The property sub-sector was the sole loser on Thursday, falling 0.18 percent. Gainers were led the financial sector, which saw a 2.10-percent increase.

A day earlier, the PSEi gained 106.37 points or 1.59 percent to 6,807.72. The wider All Shares index also added 45.90 points or 1.19 percent to close at 3,917.57.

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