RESPITE. Philippines shares are mostly up on Thursday (Sept. 29, 2022), tracking the main index, which reversed its course after a five-day decline following the Bank of England's (BoE) temporary buying program for long-dated bonds. This performance also benefited the local currency. (PNA graphics)

MANILA – The main stocks index took a breather on Thursday while the peso finished the day almost unchanged against the US dollar even after touching 59-level mid-trade.
 
After several days of decline, the Philippine Stock Exchange index (PSEi) gained 0.93 percent, or 54.57 points, to 5,934.25 points.
 
All Shares followed with a jump of 0.80 percent, or 25.24 points, to 3,190.88 points.
 
Most of the sectoral gauges tracked the main index, led by Holding Firms after it rose by 2.26 percent.
 
It was trailed by the Mining and Oil index, 1.85 percent; Industrial, 1.26 percent; Financials, 0.79 percent; and Property, 0.30 percent.
 
Only the Services index finished the trade in the negative territory after it slipped by 0.89 percent.
 
Volume remained thin at 658.93 million shares amounting to PHP5.2 billion.
 
Advancers led decliners at 121 to 76, while 42 shares were unchanged.
 
“Philippine shares snapped their losing streak, rebounding substantially on the BoE’s (Bank of England) remarks that it would purchase bonds to stabilize its currency and stifle inflation,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.
 
The BoE on Wednesday said it will start the temporary buying of long-dated United Kingdom government bonds “to restore orderly market conditions.”
 
This, after the central bank recently announced its plan to sell government bonds, known as “gilts”, a move that is part of its quantitative tightening program.
 
Limlingan said the temporary bond-buying program “is a stunning reversal in the monetary tightening policies implemented this year by most central banks to stifle inflation.”
 
On the local front, he said “investors continued to make bets that the BSP (Bangko Sentral ng Pilipinas) could fire an off-cycle rate adjustment, coupled with mounting global recession fears.
 
He said the price of gold in the international market  increased by about 2 percent “as a retreat in the dollar rekindled some of its safe-haven appeals.”
 
He, however, said, “prospects of sharp rate hikes kept the non-yielding precious metal near a two-and-a-half-year trough.”
 
Limlingan said spot gold rose by 2 percent to USD1,660.62 per ounce, recovering its earlier losses to its lowest since April 2022.
 
Oil prices also increased “following unexpected drawdowns in US crude and fuel stocks.”
 
He said Brent crude futures went up by 3.5 percent to USD89.32 per barrel and US West Texas Intermediate (WTI) by 4.65 percent to USD82.15 per barrel.
 
Meanwhile, the local currency again kept its footing against the US dollar after it finished the day at 58.97 from 58.98 a day ago.
 
It opened the day at 58.87 sideways from 58.95 on Wednesday.
 
It traded between 59 and 58.75, resulting in an average of 58.91.
 
Volume reached USD902.86 million, down from the previous day’s USD1.2 billion.
 
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the peso got support from the correction overnight of the global stocks and bonds and the downward correction of the greenback following the BoE temporary long-dated bond purchases program.
 
Ricafort cited the correction in the local bourse after a five-day slide following the upward correction in US stock markets.
 
He said local monetary authorities signaled possible surprise/off-cycle local policy rate hikes, more intervention in the local foreign exchange markets; both of which could help stabilize the peso exchange rate and overall inflation.
 
“The peso slightly stronger after crude oil prices still among eight-month lows or since early January 2022, together with the recent decline in other major global commodity prices that could lead to lower net imports/narrower trade deficits, additional rollback in local fuel pump prices, and lower inflationary pressures/overall inflation, going forward” he added.
 
Ricafort eyes the peso’s next resistance level to between 59.00 to 59.25 while immediate support is forecast to be around 58.50 to 58.75 levels. (PNA)