PSEi rises as Fed, BSP cut rates to boost growth

THE BELLWETHER INDEX moved higher on Thursday as both the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) cut benchmark rates again to help support economic growth.

The Philippine Stock Exchange index (PSEi) went up by 0.5% or 30.06 points to end at 5,990. Meanwhile, the broader all shares index decreased by 0.26% or 9.27 points to 3,453.43.

“The market crept higher as the simultaneous policy rate cuts from both the US Fed and BSP retained the differential between the two while trying to stimulate economic growth, which investors ultimately welcomed,” AP Secu-rities, Inc. said in a note.

“The local bourse edged higher as the market digested the recent rate cuts from both the Fed and the BSP. Investors welcomed the move, viewing it as supportive for growth and liquidity,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “Overall sentiment improved as traders positioned ahead of upcoming economic data.”

The US Federal Reserve cut interest rates by a quarter-percentage point on Wednesday in an uncommonly divided vote, but signaled it would likely pause further reductions in borrowing costs as officials look for clearer signals about the direction of the job market and inflation that “remains somewhat elevated,” Reuters reported.

Wednesday’s cut brought the policy rate to a range of 3.5%-3.75%.

Meanwhile, the BSP on Thursday likewise lowered its benchmark rates by 25 basis points (bps) to bring the policy rate to 4.5%, the lowest level in more than three years, as expected by 17 out of 18 analysts in a ����ý poll. It has now delivered 200 bps in reductions since August 2024.

BSP Governor Eli M. Remolona, Jr. said benign inflation gives them room to help support weak domestic demand amid lingering governance concerns that have affected investments, but stressed that they are nearing the end of their current easing cycle, with further cuts — if any — likely to be limited and dependent on data.

He added that economic prospects have darkened further, with the slowdown in third-quarter growth likely to extend to this quarter.

Most sectoral indices closed higher on Thursday. Financials rose by 1.4% or 26.99 points to 1,947.21; services increased by 0.83% or 20.83 points to 2,508.26; industrials went up by 0.51% or 43.92 points to 8,518.91; and holding firms inched up by 0.01% or 0.87 point to 4,656.91.

Meanwhile, property declined by 1.11% or 25.1 points to 2,217.80, and mining and oil went down by 0.65% or 91.06 points to 13,895.37.

Decliners narrowly beat advancers, 103 to 100, while 62 names closed unchanged.

Value turnover went up to P7.06 billion on Thursday with 864.5 million shares traded from the P6.75 billion with 657.57 million issues dealt on Wednesday.

Net foreign selling decreased to P761.25 million from P787.08 million. — Alexandria Grace C. Magno with Reuters