Stocks driven higher by low inflation data

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Philippine equities climbed to new highs on the back of benign inflation data for March, fueling optimism that interest rates will remain low in the months ahead.

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The Philippine Stock Exchange index (PSEi) reached an intraday peak of 8,136.97 before it gave up early gains to end with a modest 0.56-percent increase, or 44.94 points to 8,098.68.

It was 26th time this year the benchmark index closed at a record high. The new level broke the previous all-time closing high of 8,053.74, set on Monday.

To date, the index has accumulated a 12 percent gain since opening the year at 7,200 points.

On Tuesday, the broader All Shares index added 0.47 percent, or 21.71 points to 4,628.79.
“Interest rates are expected to remain low with the benign inflation data released today, which augurs well for the equities market,” PSE President and Chief Executive Officer Hans Sicat said.

“We hope to see more favorable developments in the coming months to help sustain the gains and attract more participation from investors,” he added.

The country’s headline inflation for March slowed to 2.4 percent from February’s 2.5 percent, data released during the day by the Philippine Statistics Authority showed. The figure is in line with the central bank’s forecast of 2.1 percent to 2.9 percent this year.

First Grade Finance Inc. Managing Director Astro del Castillo said there was “momentum buying” throughout the session, with some profit-taking shaving the gains in the afternoon but failing to prevail at the market close.

Del Castillo also cited positive economic data from the US, which allayed concerns about an unpending interest rate hike.

“There was momentum buying . . . mainly driven by good economic data in the US. Also, sentiment that the US Fed may still defer interest rate hikes [supported the market]… as well as the good turnout of the March inflation [data from the Philippines], “ del Castillo said.

On Wall Street, the Dow Jones Industrial Average gained 117.61 points, the S&P 500 inched up 13.66 points and the Nasdaq registered a 30.38-point rise.

Del Castillo added that the “thinning value turnover is an indication that there will be possible profit-taking in the coming days.”

Value turnover from the day’s trade stood at P8.3 billion.

Grace Cerdenia, research head at online broker firm 2TradeAsia.com, said: “Seasoned players checked on momentum improvement gauging the PSEi’s staying power above this mark [8,000 points]. Overall, Wall Street’s overnight incline lent support as investors sought to optimize gains.”

She said there was active trading interest in property, holding companies and power shares, particularly in companies with good “sequel stories and partnerships to unfold.”

Financials and mining and oil were losers, while the other indices advanced, led by the property subindex with a 1.27-percent increase.

The most actively traded stocks included Universal Robina Corp. and Alliance Global Group Inc., though they ended flat; Metropolitan Bank and Trust Co. and BDO Unibank Inc., which lost, while the rest increased.

The top gainers were Ayala Land Inc., SM Investments Corp., SM Prime Holdings Inc., Philippine Long Distance Telephone Co., Megaworld Corp. and Ayala Corp.

Decliners outnumbered advancers 96 to 83, while 52 issues closed unchanged. Volume turnover was 2.58 billion shares, valued at P8.3 billion.

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