The Philippine stock market sustained its rally on Friday, adding more than 1 percent as investors reacted positively to stronger crude prices, as well as continued upbeat sentiment following the decision of the Federal Reserve to ease the pace of interest rate hikes this year, analysts said.
The benchmark Philippine Stock Exchange Index (PSEi) climbed 1.33 percent or 95.84 points to end the week at 7,306.74, while the wider All Shares inched up by 0.77 percent or 32.04 points to close at 4,191.07.
Alexander Adrian Tiu, senior equity analyst at AB Capital Securities Inc. in a phone interview, said that higher oil prices and the decision of the Federal Reserve to reduce the number of interest rate hikes this year strengthened investors’ appetite for the equities market.
“Crude prices have further strengthened to $40 a barrel WTI [West Texas Intermediate],” Tiu said, explaining that stronger oil prices play an integral role in the global economy, since a collapse in prices adversely affects not only US businesses, but also those of Russia and the Middle East.
“Weaker oil prices would result in weaker energy-related companies in the US, and the energy sector forms a big part of the US economy. Weaker oil prices could result in credit defaults on the part of these energy companies. So when oil is strong, the equities market is likewise strong. We have already seen this for two consecutive weeks,” he said.
Separately, Nisha Alicer, chief equity analyst at DA Market Securities Inc., in a phone interview, agreed with Tiu that the recent move of the Federal Reserve to ease the pace of interest rate hikes from four to two gave the stock market investors more leeway in managing their respective investments.
“The decision of the Fed to have its rate adjustment in June or even later this year would give short-term investors incentive to profit-take and buy back at the same time. The Fed’s move gave the investors more opportunities as to how they would manage their investments,” Alicer said.
Total value turnover was very high at P11.16 billion, with winners dominating losers 100 to 80, with 40 issues unchanged.
Four of the six sub-indices ended in positive territory, while the mining and oil and industrial sectors shed 0.71 and 0.50 percent, respectively.