PSEi rallies to 6,800 on positive market sentiment

THE MAIN INDEX rallied to the 6,800 level on Monday as the market continued to cheer the Philippine central bank’s first rate cut in nearly four years and amid easing recession fears in the United States.

The Philippine Stock Exchange index (PSEi) rose by 0.62% or 42.50 points to end at 6,889.87 on Monday, while the broader all shares index gained by 0.4% or 15.03 points to close at 3,706.45.

Monday’s close was the PSEi’s best finish in over four months or since it closed at 6,960.43 on April 2.

“Investors continued to draw optimism from the Bangko Sentral ng Pilipinas’ (BSP) recent policy rate cut as well as the prospect of further monetary policy easing moving forward,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“The Philippine stock market gained, buoyed by a favorable shift in both monetary policy and macroeconomic outlooks. As the earnings reporting season winds down, investors’ attention has turned to broader economic trends, which are currently shaping the market’s positive trajectory,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.

The Bangko Sentral ng Pilipinas (BSP) on Thursday cut benchmark interest rates for the first time in almost four years amid an improving inflation and economic outlook, with its governor signaling at least one more reduction before the end of the year.

The BSP slashed its target reverse repurchase rate by 25 basis points (bps) to 6.25%.

BSP Governor Eli M. Remolona, Jr. said at a briefing that they could cut rates by another 25 bps within the year.

“The positive spillovers from Wall Street’s performance last Friday driven by growing confidence on the United States economy also helped in [Monday’s] session,” Mr. Tantiangco added.

Back home, the majority of sectoral indices ended higher. Property rose by 1.55% or 42.69 points to 2,788.48; mining and oil went up by 1.42% or 115.74 points to 8,257.60; financials climbed by 1.41% or 28.41 points to 2,040.08; and services increased by 0.58% or 12.59 points to 2,180.62.

On the other hand, industrials declined by 0.5% or 46.89 points to 9,271.98; and holding firms fell by 0.14% or 8.56 points to 5,840.05.

Value turnover rose to P7.64 billion on Monday with 625.66 million shares changing hands from the P7.14 billion with 699.87 million issues traded on Friday.

Decliners beat advancers, 104 versus 94, while 54 issues were unchanged.

Net foreign buying rose to P1.41 billion on Monday from P654.36 million on Friday.

“The recent rally pushed the PSEi past the critical 6,800 resistance level. We are now eyeing the 7,000 psychological resistance… as the next target,” Mr. Vistan said. “This indicates a strong upward momentum that could propel the index further if macroeconomic conditions remain supportive.” — R.M.D. Ochave