Positive sentiment, earnings push stocks higher

STOCKS CLIMBED on Thursday to reach a new high, buoyed by positive sentiment on third-quarter earnings and bullish outlooks on the economic performance of the US and Europe.

The Philippine Stock Exchange index (PSEi) closed at 8,516.02 yesterday, showing a 1.80% or 150.76-point increase, while the all-shares gauge closed at 4,956.97, rising by 1.33% or 65.04 points.

With the funds rate kept at expected levels by the US Federal Reserve, the upgrade of the growth assessment to “a solid rate” from “rising moderately” was the surprise, said Luis A. Limlingan, managing director at Regina Capital Development Corp.

“The statement noted that this growth occurred ‘despite’ disruptions from the hurricanes, and it explicitly attributed the decline in September payroll employment to the storms,” Mr. Limlingan said in a text message. “This return to a “solid” pace of growth – last referenced in the January 2015 statement – underscores the [Federal Open Market] Committee’s more positive view on real activity, following softness in parts of the economy over the last two years.”

Mr. Limlingan added that the inflation estimate for the Eurozone in October, which was lowered to 1.40% in October from 1.50% in September, also gave a push to the index. Eurozone gross domestic product (GDP) growth of 0.60% for the third quarter “was above the 0.50% expected.”

For Jervin S. de Celis, equities trader at Timson Securities, Inc., investors are maintaining a positive outlook for earnings performances after good results from BDO Unibank, Inc. and Manila Electric Company (Meralco).

“Index heavyweights such as SM [Investments Corp.], AC (Ayala Corp.), and BDO lifted the market today after BDO’s 3Q earnings disclosure report buoyed local market sentiment. Investors are probably expecting better earnings performance from the rest of the Bluechips after BDO and Meralco posted positive performances for the recent quarter,” Mr. De Celis said in a text message on Thursday.

All sectors recorded increases except mining and oil, which declined by 22.9 points or 0.17% to 13,201.58. Financials rose by 63.4 points or 3.16% to 2,064.46; industrials climbed 24.53 points or 0.22% to 10,935.37; holding firms gained 163.4 points or 1.9% to 8,741.29, services went up 3.97 points or 0.23% to 1,712.15; and property moved up by 69.47 points or 1.76% to 4,014.95.

Value turnover climbed to P9.5 billion with 1.47 billion shares changing hands from P6.67 billion last Monday.

Advancers beat decliners, 116 to 79, while 47 names closed unchanged. Foreigners increased their shareholdings to yield net purchases worth P758.47 million, a reversal of the P150.19-million net selling recorded on Monday.

Asian shares touched 10-year highs after the US Federal Reserve expressed optimism about the economy, virtually cementing the case for a year-end rate hike as investors awaited the formal nomination of the next head of the central bank. – Patrizia Paola C. Marcelo with Reuters