FED RATE PAUSE. The main equities index gained on Thursday (June 15, 2023) following the pause in the Federal Reserve's key rates earlier in the day. However, the peso ended sideways against the US dollar. (PNA graphics)
MANILA – The main stocks index ended Thursday higher while the peso moved sideways following the pause in the rate hiking cycle of the Federal Reserve earlier in the day.
The Philippine Stock Exchange index (PSEi) rose by 0.43 percent, or 27.36 points, to 6,461.42 points.
All Shares followed with a jump of 20 percent, or 7.03 points, to 3,444.07 points.
Half of the sectoral gauges gained, with Property rising 1.43 percent; Financials, 0.78 percent; and Holding Firms, 0.31 percent.
On the other hand, Services fell by 0.98 percent, Mining and Oil by 0.93 percent, and Industrial by 0.09 percent.
Volume reached 1.11 billion shares amounting to PHP6.1 billion.
Advancers led decliners at 93 to 91 while 31 shares were unchanged.
“Investors returned to the local market after the Federal Reserve skipped a rate hike at its meeting that ended Wednesday, but signalled two more rate hikes may still be in store later this year,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.
Citing reports quoting Federal Reserve Chair Jerome Powell, Limlingan said the Federal Open Market Committee (FOMC) will utilize the six weeks period during the next rate setting meet to “take into account the cumulative tightening of monetary policy.”
He attributed the latest FOMC decision to the continued deceleration of US’ inflation rate, with the May 2023 level posting an annual rate of 4 percent from the 4.9 percent in the previous month.
With the Federal Reserve decision out, Limlingan said investors’ focus for the remaining days of the week include the jobless claims, retail sales reports, result of Philadelphia Fed’s June manufacturing survey, and the Fed’s May 2023 industrial production and capacity utilization report.
As a result of the pause in the Fed’s key rates, oil prices fell by 1.5 percent to USD73.20 per barrel for the Brent crude and by 1.7 percent to USD68.27 per barrel for the West Texas Intermediate (WTI), “after the Fed projected more interest rate hikes this year worrying markets about demand just hours after government data showed an unexpected, large building US crude oil stocks.”
Meanwhile, the peso ended the day at 55.945 against the US dollar, sideways from its 55.94 close a day ago.
It opened the day at 56.00, weaker than its 55.88 start in the previous session.
It traded between 56.1 and 55.945, resulting in an average of 56.042.
Volume declined to USD729.5 million from the previous session’s USD881.9 million.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort traced the peso’s performance partly to the pause in the Fed’s key rates, hawkish signal from the Fed, the slight jump in remittances from overseas Filipino workers (OFWs) last April, and the easing of global oil prices.
He cited that as a result of the Fed decision, some market players forecast another pause in the Bangko Sentral ng Pilipinas’ (BSP) rate hiking cycle next week.
For Friday, the peso is seen to trade between 55.85 and 55.95 against the greenback. (PNA)
