Stocks climb as markets wait for Fed statement

STOCKS saw an uptick on Wednesday as markets await the US Federal Reserve’s decision, pricing in a hike in interest rates.

The bellwether Philippine Stock Exchange index rose 0.68% or 47.43 points to end at 6,928.34 yesterday.

The broader all shares index likewise increased 0.68% or 28.72 points to 4,201.37 .

“[I] am taking today’s movement as confirmation that the Fed’s hike will be within expectation (0.25%) and the market is already looking beyond this event,” Manuel Antonio G. Lisbona, president of PNB Securities, said in a text message.

Analysts said markets here and abroad seem to have already factored in the expectations of a 25-basis-point interest rate hike by the Fed after its two-day review, which will be the first time it will raise its benchmark after the December 2015 lift-off.

“Philippine markets climbed as investors awaited the final outcome of the FOMC. Expectations are for the committee to raise rates at the December meeting and to remain upbeat about the general outlook,” said Luis A. Limlingan, managing director at the Regina Capital Development Corp. in a phone message.

Aside from a policy statement, Fed Chair Janet L. Yellen is also set to discuss the US economic outlook following the meeting.

“Guidance from the meeting, the summary of economic projections, and Chair Yellen’s testimony are likely to repeat the committee’s existing view that the pace of rate hikes will be gradual,” added Mr. Limlingan.

In Asia, confidence among Japan’s large manufacturers improved for the first time since June last year as the fall in the yen improved prospects for company earnings, according to Mr. Limlingan.

All subindices ended in the green on Wednesday. Mining and oil led the charge, jumping 1.54% or 185.42 points to 12,220.41; holding firms went up by 1.28% or 89.28 points to 7,063.64; services gained 0.87% or 11.18 points to 1,288.81; industrials expanded 0.47% or 51.38 points to 10,880.16; financials climbed 0.13% or 2.20 points to 1,684.99; and property inched up 0.06% or 2.12 points to 3,112.67.

Advancers beat decliners, 97 to 73, while 44 issues were flat.

Foreigners continued to dump local shares on Wednesday, ending the session at a net selling position of P87.40 million, below the P1.11 billion in net sales seen the previous session.

Value turnover totalled P5.86 billion, lower than Tuesday’s P7.20 billion, as 1.18 billion shares changed hands. Southeast Asian stock markets shuff led sideways on Wednesday with investors looking out for hints on what is in store for them in 2017 from the Fed’s two- day policy meeting. A quarter point move is fully priced in, as are two more hikes next year. However, any sign of a move faster than that will likely hurt emerging markets.

Fed off icials worry there is risk that overly aggressive fiscal, tax and other changes under the new administration could become inflationary.