Stocks return to 6,400 level as BSP hikes rates

MANILA, Philippines — The local stock market closed in positive territory yesterday, returning to the 6,400 level ahead of the expected super-sized rate hike by the Bangko Sentral ng Pilipinas (BSP) later in the afternoon.

The benchmark Philippine Stock Exchange index (PSEi) ended at 6,403.74, up 11.65 points or 0.18 percent, while the broader All Shares index gained 12.30 points or 0.36 percent to finish at 3,388.60.

The sectoral gauges were mixed with industrial, property and holding firms ending in the green. Financials, services and mining and oil, on other hand, closed in the red.

Total value turnover reached P7.295 billion. Market breadth was positive, 95 to 83, while 48 issues were unchanged.

In its meeting yesterday, the BSP hiked rates by 75 basis points, saying that inflation, which accelerated to 7.7 percent in October – the highest since 2008 – remains a concern.

The central bank delivered a jumbo 75 basis point hike and indicated to maintain its hawkish stance to combat inflation.

“BSP hiked rates as expected with the central bank increasing policy rates by 75 bps. With inflation expected to remain elevated well into 2023, the BSP opted to push ahead with its hawkish tilt, offloading another hefty rate hike while holding back on conducting an emergency rate hike“ said Nicholas Mapa, senior economist at ING.

“We expect BSP to stay hawkish going into 2023, likely matching any move by the US Fed from hereon.”

In Asia, most stock markets extended falls as stronger-than-expected US retail sales data overnight strengthened the dollar.

US retail sales increased more than expected in October, indicating consumer spending picked up early in the fourth quarter – a factor which could possibly influence the Federal Reserve and its future pace of policy tightening.

“The tug of war between inflation and recession fears continues... It appears that global growth prospects are set for a more dramatic slowdown into 2023 as many central banks prioritize combating inflation over supporting growth,” OCBC analysts wrote.