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Stocks climb on positive sentiment, Fed bets

STOCKS climbed on Tuesday, snapping a three-day losing streak, as investors remained bullish on the Philippines’ prospects, even with inflation hitting a 14-year high last month and on expectations of smaller US Federal Reserve rate hikes.

The Philippine Stock Exchange index (PSEi) added 232.25 points or 3.6% to close at 6,674.38 on Tuesday, while the broader all shares index increased by 73.79 points or 2.16% to 3,477.72.

“A strong bounce by the PSE index today, signaling a shift in market sentiment from bearish to bullish, even if the inflation rate increased to 8%,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message on Tuesday.

Headline inflation stood at 8% in November, its quickest pace in 14 years. This was faster than the 7.7% in October and the 3.7% in the same month last year, and was also the quickest headline print since the 9.1% in November 2008.

For the first 11 months, inflation averaged 5.6% versus the 4% seen in the same period a year ago. This is still lower than the central bank’s full-year forecast of 5.8% but well above its 2-4% target for 2022.

“[There] were no concerns brought about by inflation hitting 8%, which was above the latest Bloomberg median estimate,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“Investors shrugged off concerns that the Fed will need to hike interest rates for longer than previously anticipated with the intended goal of bringing down inflation following the better-than-expected November Institute for Supply Management services data… Although, the market still broadly expects the Fed to push the rates up again by 50 basis points at its December meeting,” Mr. Limlingan added.

US manufacturing activity increased to 61.1 in November following the 60.8 it posted in October, Reuters reported. A reading above 50 means expansion in the country’s manufacturing activity which accounts for 12% of the US economy.

Back home, all sectoral indices closed higher on Tuesday. Holding firms added 268.79 points or 4.34% to close at 6,450.05; property increased by 118.56 points or 4.18% to 2,954.65; financials jumped by 51.13 points or 3.14% to 1,675.99; mining and oil went up by 147 points or 1.43% to 10,422.91; services climbed by 21.55 points or 1.3% to 1,677.76; and industrials rose by 111.03 points or 1.18% to 9,471.07.

Advancers outnumbered decliners, 100 to 81, while 46 names closed unchanged.

Value turnover climbed to P6.04 billion on Tuesday with 582.78 million shares changing hands from P5.64 billion with 514.23 million issues traded on Monday.

Foreigners turned buyers on Tuesday with P270.44 million in net purchases from P687.43 million in net selling seen the previous trading day.

Mercantile Securities’ Mr. See placed the PSEi’s support between 6,400 and 6,550 and resistance at 6,870-7,000. — J.I.D. Tabile with Reuters

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