PSEi rallies on lower inflation outlook, Fed rate cut hopes

Share prices on the Philippine Stock Exchange closed in the green on Friday, boosted by the recent forecast of slowing inflation in the country and renewed expectations of an interest rate cut in the US by the Federal Reserve.

The bellwether PSEi gained 12.02 points or 0.15% to 8,270.07 at the closing bell. The broader All Shares increased by 1.73 points or 0.03% to 5,010.71.

“Today the local bourse managed to close with gains on the back of better 2019 inflation and peso forecasts from the Development Budget Coordination Committee (DBCC),” Philstocks Financial research analyst Japhet Tantiangco.

The DBCC has downward the inflation rate forecast for this year to 2.7% to 3.5% from an earlier assumption of 3% to 4%.

The inter-agency committee also said the Philippine peso-US dollar exchange rate will close 2019 at P51 to P53 per dollar $1.

“Stronger hopes of a rate cut from the Federal Reserve by month’s end supported by dovish remarks from Fed officials also helped in lifting the market,” Tantiangco said.

John Williams, the influential vice chairman of the Fed’s policy-setting board, said in 1a speech that central banks should move quickly to support the economy when borrowing costs were already low.

Foreign funds bought P3.611 billion shares and sold P2.851 billion for a net buying position of P759.814 million.

More than 1.460 billion of shares valued at P6.740 billion, changed hands. Decliners led advancers, 102 to 94, and 53 issues were unchanged.

Week-on-week, the PSEI gained 128.25 points or 1.57% from 8,141.82 on July 12. It was stronger by 780.87 points or 10.42% from 7,489.20 on January 2, the first trading day of 2019. —VDS, GMA News