Bargain hunting lifts stocks amid Fed pause  

MANILA, Philippines — Local stocks moved in parallel with other Asian bourses yesterday as the US Federal Reserve paused rate hikes while flagging more, drawing attention to the contrast with more dovish policy outlooks in Asia.

The benchmark Philippine Stock Exchange index closed at 6,461.42, up by 27.36 points or 0.43 percent., while the broader All Shares index gained 7.03 points or 0.20 percent to finish at 3,444.07.

Mikhail Plopenio of Philstocks Financial said the market climbed due to last-minute bargain hunting.

“Throughout the day, the bourse traded in the red territory before a last-minute push that aided it to a positive close. Investors digested the results of the Federal Reserve’s recent meeting where it held its rates steady while signaling two more for the rest of the year. Moreover, the market fell below the 6,400 support level intraday before bargain hunters came in, eventually lifting it above the said level before closing,” he said.

Despite the gains, some investors are still on the sidelines as net value turnover at P5.17 billion was slightly lower than the year-to-date average of P5.51 billion.

Foreigners were net buyers, with net inflows amounting to P244.81 million.

The Fed left its benchmark funds rate window at 5-5.25 percent, as expected, yet committee members surprised markets by projecting two more 25-basis-point (bps) hikes this year, sending short-term US yields higher and closing out bets on any cuts in 2023.

The European Central Bank, meanwhile, is expected to deliver its eighth straight rate hike later in the day which will take borrowing costs to two-decade highs.

That cast Asia’s biggest economies in stark relief, with China cutting another key policy rate yesterday amid fresh signs its economy is stumbling and traders betting the Bank of Japan will stick with its ultra-easy monetary policy this week.

“The Fed is being pretty steadfast,” said Bart Wakabayashi, branch manager at State Street in Tokyo, which has brought back the contrast with stimulatory Japan to the fore.

In Asia, the focus was on China where industrial output and retail sales figures fell short of market forecasts and property investment and home sales tumbled at a sharper pace, in the latest sign the country’s post-pandemic economic recovery is losing steam.