Stocks surge on easing inflation
Local share prices surged strongly yesterday on belief that inflation will continue to ease as global oil prices drop. In similar fashion, Southeast Asian stock markets rose on Monday, as a trade truce between the United States and China boosted investor risk appetite. China and the United States agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching an agreement within 90 days.
The benchmark Philippine Stock Exchange index (PSEi) jumped 165.05 points, or 2.24 percent, to close at 7,532.90 as share prices rose across the board — led by the Property and Holding Firms counters.
Turnover also rose, with 1.49 billion shares worth a hefty 110.22 billion changing hands. Advancers swamped decliners, 115-73, with 48 issues unchanged.,
“Stocks traded higher after upbeat comments from a US trade official who suggested that some sort of a trade deal is possible during a meeting between President Donald Trump and Chinese leader Xi Jinping at the G-20 summit in Argentina,” said Regina Capital Development Corporation Managing Director Luis Limlingan.
President Trump has agreed to delay the planned rise in the tariff rate on $200 billion of imports from China from 10 percent to 25 percent. That step-up had been scheduled to take effect January 1, but has been delayed until 90 days from the time of the meeting, or March 1.
“Another positive for the Philippines, oil prices fell further on Friday as swelling inventories depressed sentiment despite widespread expectations that OPEC and Russia would agree to some form of production cut next week,” added Limlingan.
BDO Chief Market Strategist Jonathan Ravelas said “inflation is widely expected to have slowed in November from a nine-year peak, as oil prices plunged and as food supply improved.”
He said analysts believe this could allow the central bank to pause its policy tightening when it meets for the last time this year on December 13.
“A poll among 14 economists yielded a 6.3 percent median estimate for the month, with all market watchers certain that the rate will ease from October and September’s 6.7 percent,” noted Ravelas.
He explained that, “the estimate also falls within the 5.8-6.6 percent range given by the Bangko Sentral ng Pilipinas (BSP) last week, and would be the first decline in the rate since the year opened. The Philippine Statistics Authority (PSA) will report the latest inflation data on Wednesday.