Stocks surge to a new record level
Stocks soared Thursday to a new record above the 8,500-point mark, after a two-day break, following the strong performance of world markets on upbeat appraisal of the US economy.
The Philippine Stock Exchange index, the 30-company benchmark, jumped 150 points, or 1.8 percent, to close at 8,516.02, beating the previous record finish of 8,497.74 on Oct. 17.
The broader all-share index also advanced 65 points, or 1.3 percent, to settle at 4,956.97, on a value turnover of P9.5 billion. Gainers outnumbered losers, 116 to 79, while 47 issues were unchanged.
Sixteen of the 20 most active stocks ended in the green, led by miner Global Ferronickel Holdings Inc. which climbed 8.9 percent to P2.95 and developer Megaworld Corp. which rose 6.9 percent to P5.70. Conglomerate Ayala Corp. added 5.7 percent to close at P1,090.
The strong demand for emerging market equities also lifted the peso which rose to 51.42 against the US dollar Thursday, from its previous closing of 51.61 agains the greenback.
World stocks were mostly upbeat Wednesday with the Dow rising, Tokyo hitting a two-decade peak and Frankfurt leading Europe higher as the Federal Reserve offered an upbeat appraisal of the US economy.
Well-perceived corporate earnings were behind much of equity markets’ confidence, while Wall Street also welcomed stronger-than-expected jobs data and seemed hopeful that President Donald Trump’s ambitious tax plans are moving closer to becoming reality.
“We’re in many ways in a sweet spot. We’ve got stable and steady economic growth and strong earnings growth and low interest rates and inflation,” said Jack Ablin, chief investment officer at BMO Private Bank. “The only issue is valuation.”
The Fed, as expected, kept interest rates unchanged as it reported the US was growing at a “solid pace” and was not significantly dented by Hurricanes Harvey and Irma. That statement solidified the view the US central bank is likely to raise interest rates in December.
The Fed decision came as an ADP report estimated private-sector hiring surged by 235,000 jobs in October, while the Institute for Supply Management reported manufacturing industry growth tempered a bit in October but was still strong.
The US central bank will remain in focus on Thursday with Trump’s announcement of his choice to lead the Federal Reserve.
The Wall Street Journal reported that Trump informed current Fed Governor Jerome Powell on Tuesday that he will be the nominee. Powell, an attorney and former investment banker who has emerged as a consensus choice.
In Europe, Frankfurt’s Dax index was up a solid 1.8 percent by the close as German investors played catch-up after a bank holiday and a weaker euro gave a boost to exporters.
Paris followed suit with much more modest gains, while London ended almost unchanged, with the benchmark FTSE 100 failing to capitalize much on a soft pound.
Many investors felt jittery ahead of a key Bank of England decision Thursday on interest rates, which are widely expected to be hiked to counter Brexit-fueled inflation. If so, this would be the first British rate rise since 2007.
The London market was also hampered by weakness among clothing retailers after a trading update from Next which also weighed on rival Marks & Spencer.
Tokyo and Seoul led a rally in Asian shares amid strong earnings reports across the region including from tech giants Sony and Samsung.