Manila: Both the Philippine Stock Exchange index (PSEi) and the Philippine peso experienced a rebound on Thursday, influenced by the Bangko Sentral ng Pilipinas (BSP) decision to cut rates during the day. BSP's key rates were reduced by 25 basis points to 4.5 percent for the target reverse repurchase rate (RRP) amid manageable inflation levels.
According to Philippines News Agency, the local bourse's main index increased by 0.50 percent to 5,990.00, though the broader All Shares index saw a decline of 0.27 percent to 3,453.43 points. Gains were noted in several sectoral gauges, including Financials at 1.41 percent, Services at 0.84 percent, Industrial at 0.52 percent, and Holding Firms at 0.02 percent. Conversely, the Property and Mining and Oil sectors experienced declines of 1.12 percent and 0.65 percent, respectively. Trading volume reached 864.5 million shares, amounting to PHP7.01 billion.
Luis Limlingan, head of sales at Regina Capital Development Corporation (RCDC), attributed PSEi's rise to the market's digestion of the BSP rate cut, alongside an equivalent reduction in the U.S. Federal Funds Rate to 3.5 to 3.75 percent. "Investors welcomed the move, viewing it as supportive for growth and liquidity. Overall sentiment improved as traders positioned ahead of upcoming economic data," Limlingan noted.
Additionally, the local currency strengthened against the U.S. dollar, closing the day's trade at 58.99, an improvement from 59.21 the previous day. It opened stronger at 59.12 and traded within a range of 58.96 to 59.18, with an average rate of 59.1.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort commented on the positive market sentiments, highlighting a hawkish signal from BSP Governor Eli Remolona. The indication that the latest rate cut might be the last in this easing cycle, contingent on upcoming economic data, further boosted market confidence. Ricafort also noted that the Fed rate cut and the seasonal increase in remittances from overseas Filipino workers during the Christmas season contributed to the optimistic market outlook.
