Stocks end flat as investors bet on hawkish BSP

The local stock market closed marginally higher yesterday as investors bet on a more hawkish stance by the central bank in its next rate-setting meetings as inflation continues to quicken and the peso weakens further against the dollar.

The benchmark Philippine Stock Exchange index or PSEi ended almost flat at 6,361.82, up by just 9.50 points or 0.15 percent.

Likewise, the broader All Shares index rose 5.37 points or 0.16 percent.

“Philippine shares eked out modest gains to sustain its winning streak,” Regina Capital said, adding that investors likely welcomed a more hawkish tune by the Bangko Sentral ng Pilipinas (BSP) as the peso breached the 56 to the dollar mark on Thursday.

Total value turnover at the stock market reached P6.60 billion while foreign funds remained net sellers with P123.42 million.

In other Asian markets, stocks followed Wall Street higher after two Federal Reserve officials said the US economy might avoid a recession and news reports said China might boost construction spending to stimulate its struggling economy.

Wall Street’s benchmark S&P 500 index rose on Thursday after a member of the Fed panel that sets interest rates, James Bullard, said a “soft landing” for the economy still was his “base case.” Another member of the Fed panel, Christopher Waller, said “fears of a recession are overblown.”

“Investor recession fears ebbed,” said Robert Carnell and Iris Pang of ING in a report.

Investors are uneasy that aggressive US and European interest rate hikes to cool inflation that is running at a four-decade high might derail global economic growth.

Bullard, who is president of the Federal Reserve Bank of St. Louis, said “it would make a lot of sense” to raise the US central bank’s key interest rate by three-quarters of a percentage point, or triple the usual margin, at its meeting this month. That would repeat the dramatic mid-June rate hike, the Fed’s biggest in 28 years.