Market posts biggest gain in 3 weeks on Wall St rally

Share prices closed 1.91 percent higher yesterday as investors chased bargains for a second straight day, inspired by Wall Street’s rally and the government’s improved fiscal outlook, dealers said.

They said it was positive that after a volatile week, the market had recovered much of the ground lost on concerns about the prospects of higher US interest rates and lower growth.

The composite index rose 39.67 points to 2,121.47, after trading between 2,081.80 and 2,153.11. Volume was P1.35.

The broader all-shares index rose 18 points to 1,343.26.

Gainers led losers 72 to 22, with 35 stocks unchanged.

"What’s good with the market’s recent heavy losses is that they have brought us to more affordable levels. Investors now get a full discount," said Nestor Aguila of DA Market Securities.

He said inflation concerns in the United States remain but had eased somewhat after Federal Reserve chairman Ben Bernanke’s remarks Thursday that inflation expectations have remained within historical ranges.

"As far as the Philippine market is concerned, we’re going towards the 2,200 level depending on the US performance (later Friday). Talking about new lows for the market is out of the picture for now," Aguila said.

Dealers said sentiment also got a shot in the arm after the government reported Thursday that it posted a budget surplus for the second consecutive month in May on the back of better revenue collection and prudent spending.

The surplus of P5.8 billion last month helped narrow the budget gap for the five months to May to P44.2 billion from P50 billion as of end-April.

"The May fiscal performance is good news," ING regional economist Tim Condon said in a note to clients.

Condon said this year’s deficit target of P125 billion, or 2.1 percent of gross domestic product, could be achieved.

Telecom stocks led the market higher on a technical rebound following recent steep losses.

Philippine Long Distance Telephone Co. (PLDT) advanced P35 to P1,805 while Globe Telecom gained P50 to P930.

Ayala Land rose 25 centavos to P11.75 while parent Ayala Corp. shed early gains to close flat at P350.

San Miguel Corp. A shares rose 50 centavos to P64.50 while its B shares fell 50 centavos to P71.

Concerns the US will raise interest rates sent emerging markets including the Philippines tumbling in the past month on concern that global economic growth will slow. The Philippine Stock Exchange Index lost 18 percent since May 8, when the measure climbed to its highest since July 13, 1999. — AFP