PHILIPPINE SHARES climbed on Monday as slower-than-expected June inflation boosted expectations of a Bangko Sentral ng Pilipinas (BSP) rate cut by next month.
The benchmark Philippine Stock Exchange index (PSEi) climbed by 0.56% or 36.68 points to end at 6,529.43 on Monday, while the broader all shares index rose by 0.44% or 15.43 points to close at 3,524.42.
“The local bourse gained … as hopes for an interest rate cut by August continued to boost sentiment following the easing of the June inflation rate,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.
Headline inflation stood at 3.7% in June, the Philippine Statistics Authority reported on Friday, easing from 3.9% in May and 5.4% in the same month a year ago.
This was within the BSP’s 3.4-4.2% forecast for the month and was slightly slower than the 3.9% median estimate in a BusinessWorld poll of 14 analysts.
This also marked the seventh straight month that the consumer price index (CPI) settled within the BSP’s 2-4% target band.
BSP Governor Eli M. Remolona, Jr. has said the Monetary Board is “on track” to deliver its first rate cut in over three years at its Aug. 15 meeting as they expect inflation to continue easing this semester.
“Philippine shares continued their upward trajectory as in the main index closed above 6,500 as investors brace themselves for another week that could give hints on the timing of the US Federal Reserve’s rate cut,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
The market is awaiting Fed Chair Jerome H. Powell’s US congressional testimony on July 9-10, as well as the release of US consumer inflation data on July 11, among others, he said.
The Fed has maintained its target rate at the current 5.25%-5.5% range since July 2023.
Traders currently set about 76% odds for a rate cut at the Fed’s September meeting, up from 64% a week ago, according to the CME Group’s FedWatch Tool, Reuters reported. A subsequent cut is predicted by December.
Sectoral indices ended mixed on Monday. Financials went up by 2.65% or 52.30 points to 2,018.88; industrials rose by 0.59% or 53.66 points to 9,123.48; and mining and oil climbed by 0.57% or 48.78 points to 8,607.99.
Meanwhile, services fell by 0.49% or 10.10 points to 2,018.16; property went down by 0.09% or 2.37 points to 2,549.76; and holding firms dropped by 0.08% or 4.71 points to 5,529.52.
Value turnover climbed to P5.63 billion on Monday with 447.35 million shares changing hands from the P4.24 billion with 454.88 million issues traded on Friday.
Decliners outnumbered advancers, 104 to 95, while 42 names closed unchanged.
Net foreign buying stood at P143.69 million on Monday versus the P11.47 billion in net selling recorded on Friday. — A.E.O. Jose with Reuters