Psei recovers as Wall St. rallies on strong US data

THE MAIN INDEX posted gains on Tuesday, tracking the rise of US markets driven by the release of the data from the world’s largest economy showing acceleration in their services sector.

The bellwether Philippine Stock Exchange index (Psei) rose 0.43% or 29.73 points to 6,806.14.

The broader all-shares index, meanwhile, slid 0.04% or 1.91 points to 4,116.74.

“Locally, shares were driven higher from the overnight sentiment in US as the DJIA ( Dow Jones Industrial Average index) closed Monday sessions at a record high,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a text message.

The rise in US stocks was attributed to the improved services data for November released by the Institute for Supply Management, which showed the sector — the major driver of the US economy — to have expanded at its fastest pace in over a year.

Christian Caye A. Decasa, technical analyst at Regina Capital, said local inflation data also affected trading as it showed a normalization in the rise in prices.

The Philippine Statistics Authority reported yesterday that headline inflation jumped to 2.5% last month from the 2.3% logged in October and the 1.1% recorded in November 2015. Last month’s print was higher than the 2.2% median estimate in a Businessworld poll of 16 economists and also surpassed the Bangko Sentral ng Pilipinas’ 1.6-2.4% forecast range.

Inflation averaged 1.7% for the 11 months to November, still lower than the government’s 2-4% target band and the central bank’s estimate of a 1.8% average for this year.

Mr. Decasa also attributed the recovery to “bottom- fishing ” activities after the Psei dropped by around 90 points on Monday, although noting that the local market is showing trend of possibly sustaining to trade in positive territory.

“If you look at Psei’s price chart, we could see that there is a somewhat strong support at 6,8006,770 which means that demand is ought to pick up at those levels. I think it’s possible for the index to continue rallies but we maintain a cautious outlook as the market remains in a downward trajectory,” Mr. Decasa said via text.

Subindices were mixed. Property went up 1.42% or 42.62 points to 3,036.65 while holding firms rose 0.53% or 36.73 points to 6,893.31.

On the other hand, industrial fell by 0.68% or 75.03 points to 10,828.97; financials went down 0.34% or 5.70 points to 1,668.54; services fell 0.33% or 4.24 points to 1,274.79; and mining and oil slipped by 0.2% or 25.36 points to 12,102.60.

Decliners outnumbered advancers, 112 to 68, while 44 issues were unchanged.

Net foreign selling declined to P44.90 million, from the P300.61 million in outflows seen on Monday. Value turnover reached P5.78 billion, slightly higher than Monday’s P5.26 billion after 823.44 million shares changed hands.

For the rest of the week, Mr. Limlingan said the Psei is expected to trade at a resistance level strongly set at 7,000 points, with a weak support at 6,770 points. •