Stocks react to sudden Fed cut; advance on last-minute buying

MANILA, Philippines — The stock market made a last-minute rally yesterday after trading mostly lower for most of the session following the US Federal Reserve’s emergency move to cut key policy rates by 50 basis points.

The benchmark Philippine Stock Exchange index (PSEi) managed to rally by 76.72 points, or 1.13 percent, to settle  at 6,867.26.

Likewise, the broader All Shares gauge rose by 26.81 points, or 0.66 percent, to finish at 4,089.06.

Most indexes went up as well with the property and holding firms leading the gainers.

“Last minute bargain hunting sent the local bourse higher by 76.72 points,” said Philippine Stocks Financials.

Asian markets were mostly up following the Federal Reserve’s emergency rate cut, but US Financial markets did not find enough comfort from the policy move.

In a surprise move yesterday, the US Fed cut interest rates by 50 basis points in a bid to shield the US economy from the impact of the spreading coronavirus.

Fed chair Jerome Powell maintained his view that the US economy remains strong, but said the spread of the virus had caused a material change in the US central bank’s outlook for growth.

“The virus and the measures that are being taken to contain it will surely weigh on economic activity, both here and abroad, for some time,” Powell said.

Sought for comment, BPI lead economist Emilio Neri Jr. said the Federal reserve’s decision was a massive surprise as the cut was not just double the usual, it was even carried out in between its scheduled meetings.

“While the decision helps boost confidence that global liquidity will remain sufficient, it may have also signaled that the FOMC knows something more seriously wrong than what the market is aware of. The surprise action may suggest they are in panic mode,” Neri said.