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Market climbs; Ayala issues rise

The stock market rose slightly in cautious trading Tuesday after the Federal Reserve unveiled an unprecedented bond-buying program to support the US economy.

The Philippine Stock Exchange added 30.90 points, or 0.6 percent, to 4,774.27 on a value turnover of P5.1 billion. Gainers beat losers, 114 to 68, with 31 issues unchanged.

Conglomerate Ayala Corp. advanced 5.9 percent to P439.60, while property unit Ayala Land Inc. climbed 5.8 percent to P29.10.

Megaworld Corp., the biggest lessor of office spaces, rose 5.3 percent to P1.99, but Universal Robina Corp., the largest maker of snack foods, fell 8 percent to P95.05.

Meanwhile, the rest of Asian markets and crude prices surged while the dollar sank Tuesday.

While most of the planet goes into lockdown, traders gave a massive thumbs up to the US central bank’s pledge to essentially print cash in a move not seen since the global financial crisis more than a decade ago.

The Fed, which has already slashed interest rates to record lows, said it will buy unlimited amounts of Treasury debt and take steps to lend directly to small- and medium-sized firms hammered by restrictions across the country.

The plan failed to inspire US traders, with all three main indexes on Wall Street sliding, but equities in Asia rallied with Tokyo ending more than seven percent higher.

The Nikkei was given extra lift by a Bank of Japan decision to embark on its own massive bond-buying scheme.

Seoul was up more than eight percent, Hong Kong, Sydney, Singapore and Taipei each rose more than four percent, and Wellington lifted more than seven percent. 

Shanghai and Mumbai added two percent, Bangkok more than one percent, though Jakarta fell almost one percent.

AxiCorp’s Stephen Innes called the Fed’s move “the most significant monetary experiment in the history of financial markets”.

“Asian investors like what they see from an all-in Fed, which is being viewed in a very impressive light for both Main and Wall Street, even as the US congress dithers,” he added.

Edward Moya at OANDA said it was “a game changer.”

But Innes pointed out that US senators remain gridlocked, with Democrats on Monday again blocking a nearly $2 trillion rescue package for the economy.

“The US senate should be drawing on the experience of its failure to act fast in the 2008 crisis,” he said. 

“Instead, it has yet again failed to act responsibly in the 2020 crisis. The proposed economic stimulus package is massive, but the longer the delay, the more colossal it will need to be to appease the markets.”

And CMC Markets analyst Michael Hewson said the failure to get the bill through Congress “is sowing concern that US politicians simply don’t get it when it comes to the people they claim to represent.”

With an expected flood of dollars into financial markets, the greenback suffered a rare sell-off, having surged for the past few weeks.

It lost almost four percent against the Australian dollar, three percent against the New Zealand dollar and more than one percent to the South Korean won, Russian ruble and Turkish lira.

It was also lower against its major peers, with the euro up more than one percent. With AFP

The weaker dollar also helped lift crude, which has been hammered to multi-year lows by a crash in demand owing to the global lockdown as well as a price war between producers Saudi Arabia and Russia.

Moya warned that prices would likely fall again as global lockdown efforts hammer demand.

“Oil is only rallying because the Fed’s unprecedented measures finally stopped the stronger dollar,” he said. 

“Crude prices will have wild swings, but no one is expecting the bottom to be already in place.” With AFP

Topics: Stock Market , Philippines Stock Exchange , PSE , Philippines Stock Exchange Index , PSEi , coronavirus disease 2019 , COVID-19 , Ayala
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