Stocks rebound past 6,600 level

MANILA, Philippines — The local stock market capped another volatile week in the green as investors positively viewed the Bangko Sentral ng Pilipinas’ moderate rate hike as an inflation dampener, although economists have not ruled out a continued tightening cycle.

The benchmark Philippine Stock Exchange index finished at 6,602.17, up by 65.81 points or 1.01 percent, while the broader All Shares index rose to 3,516.72, up by 23.95 points or 0.69 percent.

Total value turnover reached P4.679 billion. Market breadth was positive, 102 to 82, while 43 issues were unchanged.

Unicapital Securities said the move of the Philippine central bank to raise rates by 25 basis points would put downward pressure on inflation, which remained elevated at 8.6 percent.

In other Asian markets, however, shares dipped yesterday as lingering concerns about the banking sector played against hopes that central banks could be nearing the end of their interest rate hiking cycle.

Pledges by authorities to provide support to troubled lenders and depositors provided stability for investottrs worried that the collapse of two US banks and the takeover of Credit Suisse could usher in a new financial crisis.

The turmoil has also forced the US Federal Reserve and other central banks to change their monetary policy game plan to avoid further problems in the finance industry.

On Wednesday, the Fed announced a quarter-point rate hike – half what was expected before the latest upheaval – and indicated it could pause soon, while there is growing talk it could even begin cutting by year’s end.

Observers said an expected tightening of credit in the finance sector – caused by wary banks lending less – would allow the Fed to step back.

But SPI Asset Management’s Stephen Innes cautioned: “A Fed rate cut would likely require more turmoil in the banking sector, but more importantly, how intensely the expected tighter credit market crunch will negatively impact the real economy.”

The increase came as central banks in Britain, Switzerland and Norway also raised rates, with the European Central Bank having done so last week.

Analysts said the moves indicated officials were confident the banking crisis could be contained and were still focused on bringing inflation down.