Stocks rebound after strong factory activity data

PHILIPPINE SHARES recovered on Tuesday on strong factory activity data and also buoyed by gains on Wall Street overnight.

The Philippine Stock Exchange index rose (PSEi) by 1.48% or 107.67 points to end at 7,380.32 on Tuesday, while the broader all shares index climbed by 1.14% or 44.68 points to 3,963.36.

“Local shares ended Tuesday in positive territory, supported by the strong performance of Philippine factories,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The S&P Global Philippine Manufacturing Purchasing Managers’ Index (PMI) rose to 53.7 in September from 51.2 in August. A PMI reading above 50 means improved operating conditions from the previous month, while a reading below 50 shows deterioration.

The September manufacturing PMI was the highest in over two years or since the 53.8 posted in June 2022.

“The local market bounced back this Tuesday… The positive spillovers from Wall Street amid the rate cut cues from US Federal Reserve Chair Jerome H. Powell helped the market in its rise today,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

US markets closed higher on Monday. The Dow Jones Industrial Average Index rose 0.041% or 17.15 points to 42,330.15; the S&P 500 Index gained 0.42% or 24.31 points to 5,762.48; and the Nasdaq Composite Index increased 0.38% or 69.58 points to 18,189.17.

Investor focus has centred around the pace of rate cuts from the Fed after the US central bank kick-started an easing cycle last month with a 50-basis-point (bp) cut, Reuters reported.

Mr. Powell indicated on Monday that the US central bank would likely stick to quarter-percentage-point cuts henceforth after new data boosted confidence in economic growth and consumer spending.

“Investors appreciated the possibility of reserve requirement ratios (RRR) being brought down to 0% within Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr.’s term,” Mr. Tantiangco added.

The BSP last month announced that it would reduce the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5% effective on Oct. 25.

All sectoral indices closed higher on Tuesday. Property rose by 2.36% or 69.17 points to 2,999.80; holding firms surged by 1.75% or 107.73 points to 6,257.88; financials went up 1.44% or 33.08 points to 2,330.70; services gained 0.92% or 20.71 points to end at 2,251.97; industrials climbed by 0.67% or 65.60 points to 9,776.28; and mining and oil inched up by 0.6% or 52.13 points to 8,727.76.

Value turnover declined to P6.04 billion on Tuesday with 1.13 billion shares changing hands from the P7.22 billion with 1.1 billion issues traded on Monday.

Advancers outnumbered decliners, 124 to 73, while 60 names were unchanged.

Net foreign buying rose to P463.82 million on Tuesday from P87.71 million on Monday. — R.M.D. Ochave with Reuters