Index rebounds on US inflation optimism

MANILA, Philippines — Share prices rebounded by 32.69 points or 0.50 percent to settle at 6,615.07 as US inflation turned out to be “cooler-thanexpected,” analysts said.

Likewise, the broader All Shares index gained by 17.92 points or 0.52 percent to end at 3,449.57.

Most sectoral gauges finished in positive territory except for the property sector. Market breadth was positive with 102 gainers and 73 losers while 37 issues were unchanged.

Luis Limlingan of Regina Capital said share prices rose once again, boosted by “cooler-than-expected US consumer price index report.’’

US consumer prices rose at an annual pace of 7.1 percent in November, down from 7.7 percent in October, according to US Labor Department data.

The consumer price index (CPI) is a closely watched measure of inflation and was forecast by analysts to come in higher.

The bigger-than-expected drop should come as a relief to monetary policymakers after wholesale inflation proved hotter than expected last week.

“The key takeaway from the report at first blush is that overall inflation is cooling and that the Fed should be convinced to temper the pace of its rate hikes and perhaps place a lower ceiling on its terminal rate,” said market analyst Patrick O’Hare at Briefing.com.

The US Fed is widely expected to lift interest rates by 50 basis points – a slowdown from its previous four hikes.

Lower inflation and interest rates are positive for businesses, and stock prices in Europe surged after the US inflation data was released.

While they later gave up part of those gains, London ended the day up 0.8 percent, Frankfurt 1.3 percent and Paris 1.4 percent.

Wall Street’s main indices ended higher as well, with the Dow ending 0.3 percent higher and the tech-rich Nasdaq Composite Index rising one percent.

“In summary, Santa has delivered a nice enough package to the Fed, who can now celebrate the Christmas with more peace knowing that inflation is moving in the direction that they want with plenty of tail wind behind,” said Naeem Aslam, chief market analyst at Avatrade. –AFP