Stocks rebound on bargain hunting after break

STOCKS rebounded on Wednesday on bargain hunting after the one-day trading break and ahead of the expected rate hike from the US Federal Reserve.

The benchmark Philippine Stock Exchange index (PSEi) improved by 81.65 points or 1.21% to close at 6,802.73 on Wednesday, while the broader all shares index rose by 18.16 points or 0.50% to 3,614.99.

“Investors reverted to bargain hunting after the holiday… The streets are largely expecting the [US] central bank to raise rates by 50 basis points (bps) this week,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The stock market was closed for trading on Tuesday in commemoration of Eid’l Fitr.

“Meanwhile, oil prices [jumped] as demand worries stemming from China’s prolonged COVID-19 (coronavirus disease 2019) lockdowns outweighed the prospect of a European embargo on Russian crude,” he added.

First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message that the market was on bargain hunting mode due to cheap valuation.

The Fed is widely expected to fire off another rate hike at its May 3-4 review following the 25bp increase it made in March.

Fed Chairman Jerome Powell has said they are will consider increasing borrowing costs by a bigger 50 bps to help tame inflation that has reached multi-decade highs.

Fed policy makers are looking set to deliver a series of aggressive interest rate hikes at least until the summer, Reuters reported.

There won’t be economic or dot plot projections at this meeting, but the market will pay close attention to Mr. Powell’s press conference for clues on interest rates and balance sheet reduction.

Meanwhile, oil prices bounced on Wednesday ahead of the Fed’s decision and further sanctions on Russia by the European Union.

Brent crude futures had risen $1.46 or 1.4% to $106.43 a barrel and West Texas Intermediate crude futures rose $1.59 or 1.6% to $104.00 a barrel.

The majority of the sectoral indices ended in the green on Wednesday, except for mining and oil, which fell by 215.13 points or 1.87% to 11,260.58, and holding firms, which dropped by 2.45 points or 0.03% to 6,335.55.

Meanwhile, property gained 73.85 points or 2.42% to 3,125.01; financials went up by 28.09 points or 1.76% to 1,616.91; industrials climbed by 124.74 points or 1.34% to 9,403.45; and services added by 6.66 points or 0.35% to 1,876.19.

The MidCap index dropped by 14.12 points or 1.27% to 1,100.67 while the Dividend Yield index advanced by 8.46 points or 0.53% to close at 1,595.18.

Decliners beat advancers, 124 versus 64, while 54 names ended unchanged.

Value turnover increased to P6.92 billion with 631.99 million shares changing hands from P3.61 billion with 795.48 million issues seen on the previous day.

Net foreign selling grew to P2.43 billion from the P491.11 million seen on Monday. —