Stocks rally after surprise BSP rate cut

The local stock market rallied yesterday to finish in the green after several days of losses.

The benchmark Philippine Stock Exchange index or PSEi gained 73.58 points or 1.20 percent to close at 6,191.84 while the broader All Shares index rose 30.17 points or 0.83 percent to end at 3,631.15.

All the other gauges went up, with the services, holding firms and financials among the biggest gainers.

Total value turnover reached P5.30 billion. Market breadth was positive with 99 advancers to 91 decliners, while 54 issues were unchanged.

“Local shares rallied in late hours to close solidly higher, recovering a chunk of the week’s losses, ahead of a key update of the banking sector from the US Federal Reserve plus the surprise reduction in policy rates from Bangko Sentral ng Pilipinas, said Luis Limlingan of Regina Capital.

On Thursday, the BSP’s policy-making body, the Monetary Board, implemented a deep 50 basis points cut on interest rates to 2.25 percent. The overnight deposit and lending rates were also slashed to 1.75 percent to 2.75 percent, respectively, as part of the institution’s response to the coronavirus disease 2019 or COVID-19 pandemic.

“The MB noted that though economies start to reopen, the recovery would likely be uneven. This is the third 50 basis points rate reduction implemented. The first two was in March and April. The BSP remains committed to deploying a wide range of monetary instruments and regulatory relief measures to ensure a noninflationary and sustainable growth,” Limlingan said.