PSEi rallies as markets expect Fed rate cut

PHILIPPINE shares rallied on Monday amid expectations of a US interest rate cut this week, as well as a more optimistic forecast for the local economy.

The benchmark Philippine Stock Exchange Index (PSEi) went up by 1.15% or 81.35 points to close at 7,104.20. The broader all-share index gained 0.82% or 31.37 points to 3,820.

“Optimism towards a possible rate cut by the Federal Reserve in their meeting this week drove the local bourse higher,” Japhet Louis O. Tantiangco, a senior research analyst at Philstocks Financial, Inc., said in a Viber message.

“The local currency, which exhibited strength against the dollar in today’s trading, also contributed to the market’s climb,” he added.

The Fed is expected to cut its benchmark rate for the first time in more than four years at its policy meeting on Sept. 17-18.

The peso closed at P55.888 a dollar, 10.70 centavos stronger than its P55.995 finish on Friday, based on Bankers Association of the Philippines data. This was the peso’s strongest close in almost six months.

Markets were also buoyed by the World Bank’s growth forecast for the Philippines this year, Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a Viber message.

“Philippine shares started the week positively, buoyed by the World Bank’s forecast of a 5.8% gross domestic product (GDP) growth for 2024, driven by lower interest rates boosting domestic consumption,” he said.

World Bank lead economist Gonzalo J. Varela last week said the lender is confident about the country’s economic growth. It expects the economy to grow by an average of 5.9% from this year until 2026.

All of the market’s sectoral indices closed higher. Mining and oil rose by 1.58% or 125.09 points to 8,004.81, while financials increased by 1.43% or 30.80 points to 2,183.09. The industrial index went up by 1.37% or 127.54 points to 9,429.51.

Holding firms gained 1.29% or 77.03 points to 6,021.97, while the property index added 0.64% or 18.05 points to 2,837.56. Services rose by 0.39% or 8.69 points to 2,225.41.

Value turnover dropped to P3.96 billion from P5.41 billion. Traded stocks rose to 724.3 million from 695.45 million on Friday.

Advancers beat decliners 115 to 85, while 53 stocks were unchanged. Net foreign buying fell to P158.29 million from P188.92 million. — Revin Mikhael D. Ochave