The PSEi rises to the 6,600 level on hopes of a Fed rate cut

THE MAIN INDEX rose to the 6,600 level on Thursday, ahead of the release of June US Consumer Price Index (CPI) inflation data, which could reinforce expectations of a US Federal Reserve rate cut in September.

The benchmark Philippine Stock Exchange index (PSEi) rose 1.84% or 119.89 points on Thursday to close at 6,609.24, while the broader all-stock index rose 1.3% or 45.64 points to close at 3,555.68.

This was the PSEi’s best finish and marked its return to the 6,600 level for the first time in more than a month, or since it closed at 6,619.89 on May 24.

“The local index rose sharply, along with Asian markets, following a record rally in US stocks, fueled by expectations that US inflation data for June will reinforce expectations of Federal Reserve rate cuts starting in September.” , said China Bank Capital Corp. Managing Director Juan. Paolo E. Colet said in a Viber message.

“With the PSEi closing on healthy volume above 6,600, we could see trading momentum and positive sentiment moving towards the 6,700 resistance in the coming sessions,” Mr Colet added.

Markets expect the U.S. CPI to be lower than the consensus estimate of 3.1% in June, AB Securities, Inc. Vice President Jovis L. Vistan said. in a Viber message.

“Recent economic data points to weak demand, including lower-than-expected PMI (purchasing managers’ index) figures and a rise in unemployment. These indicators point to the possibility of easing monetary policy in the US, which has eased pressure on the local market,” Mr Vistan said.

Asian shares rose to record highs on Thursday as traders counted down U.S. data expected to show an easing in inflation and pave the way for interest rate cuts from September, Reuters reported.

Japan’s Nikkei rose 1% to a record high of 42,426.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2% to a two-year high. Taiwanese shares hit a record peak and Australia’s ASX 200 closed within a stone’s throw of its all-time high.

Fed Chairman Jerome H. Powell told lawmakers on Capitol Hill overnight that “more good data” would strengthen the case for the U.S. central bank to cut rates. Futures prices imply about a 75% chance of a cut in September.

All sector indices closed higher on Thursday. Holdings rose 2.34% or 129.74 points to 5,661.28; industry and services rose by 1.85% or 166.96 points to 9,188.81; real estate increased by 1.66% or 42.42 to 2,584.08; mining and oil rose 1.30% or 110.61 points to end at 8,572.60; services increased by 1.22% or 24.62 points to 2,035.43; and financial services rose 1.1% or 21.97 points to 2,014.96.

Value turnover rose to P6.8 billion on Thursday with 427.66 million shares changing hands, while the P6.22 billion 413.15 million shares traded on Wednesday.

The advancers overwhelmed the decliners, 117 versus 68, while 60 names closed unchanged.

Net foreign purchases stood at P68.47 million on Thursday, compared to the P202.79 million in net sales recorded on Wednesday. — SJ Talavera of Reuters