OPTIMISM WANES, INDEX FLAT

The benchmark closed at 6,942.76, rising 23.22 points or 0.34 percent after swinging between 6,871.18 and 6,942.76

Confidence luggage Britain’s former Chancellor of the Exchequer Rishi Sunak shows the Budget Box as he leaves 11 Downing Street. Now British finance minister, Sunak unveils his annual budget on 3 March, confirming plans to safeguard businesses and jobs and to tackle virus-fueled debt. Spendings to tame the effects of the virus are driving optimism in global markets.

Strong market-on-close buying saved the day for the Philippine Stock Exchange index (PSEi) after the local market fluctuated between gains and losses during the session as vaccine rollout optimism wanes.

The benchmark closed at 6,942.76, rising 23.22 points or 0.34 percent after swinging between 6,871.18 and 6,942.76. Some 195,489 shares valued at P9.44 billion were traded.

Net foreign selling persisted for the 11th straight session at P300 million while value turnover reached P9.4 billion, AB Capital Securities Inc. said in a note.

In the region, Asian markets rose following the previous day’s losses but investors remain on guard over a possible correction as concerns about asset bubbles and a surge in inflation continue to play against progress in fighting coronavirus.

News of more vaccines coming on line and being rolled out, the expected passage of US President Joe Biden’s stimulus package, slowing infection rates and easing lockdowns are contributing to the narrative that the global economy will see a burst of activity from the second half of the year.

Reflation worries persist

Reflation expectations, however, are causing a headache for investors, who fear the spending boom will send prices rocketing and force the US Federal Reserve to hike interest rates, removing a key pillar of support for equities over the past year.

This anxiety, compounded by a 12-month rally that has pushed equities to record or multi-year highs, has jolted markets recently.

Last week’s sell-off came on the back of rising US Treasury yields, an indication of rising interest rates, and while the bond market has steadied this week traders remain cautious.

Hopes for a quick bounce back were boosted Tuesday when the White House said it would have enough shots to immunise every adult by the end of May, two months earlier than first thought.

But “so are the market’s inflation expectations,” said Axi strategist Stephen Innes.

Asian investors brushed off a Wall Street retreat to push higher Wednesday, with Hong Kong rallying more than one percent while Shanghai, Singapore, Seoul and Taipei were also in positive territory.