PHP, PSEi Remain Strong Thursday

The Philippine peso and the main equities index remained strong Thursday on improvement of sentiments amid reports of slower factory activity in China for May 2017.

The local unit ended the day at 49.75 from 49.76 a day ago, strong despite the strength of the US dollar in the afternoon session after reports of slower factory activity in the world’s second largest economy in the fifth month this year came out.

Result of the private survey done by Caixin and research firm Markit showed that Manufacturing Purchasing Managers’ Index (PMI) fell to 49.6 percent last May from the previous month’s 50.3.

An index above 50.0 indicates expansion while a reading below 50 indicates contraction.

A trader said the report was the major factor in Thursday’s currency trading, which saw a narrow trading range for the peso against the greenback at 49.81 and 49.75, its opening and closing levels, respectively.

Average rate for the day stood at 49.78, little changed from the 49.76 in the previous session.

Volume of trade reached USD325.8 million, lower than Wednesday’s USD500.6 million.

The trader said investors are “very sensitive” about reports on the Chinese economy lately given the recovery of its exports and its over-all growth path.

Amid this report, the trader said a hike in the Federal Reserve rates had been priced in for this month, when its Federal Open Market Committee (FOMC) meets on June 13-14.

If this expectation materializes, it will be the third after the total of 50 basis points increase in the Fed rates last December and March.

To date, the Fed’s key rates range between 0.75 percent and one percent.

The currency pair is seen to trade between 49.60 and 49.90 Friday, wider than the usual 20 centavos range difference and the trader attributed this to the release of the US’ non-farm payrolls report Friday night.

Expectations were for the creation of 180,000 new jobs from the 211,000 last April, the trader added.

The Philippine Stock Exchange index (PSEi) increased by 1.15 percent or 90.37 points Thursday to finish the day at 7,927.49 points.

Another trader pointed this to correction after the main index’ weakness in the last two days.

All Shares tracked the main index after ending the trade up by 0.96 percent, or 44.82 points, to 4,730.32 points.

Most of the indices followed the main index with Services leading the sectors through a 3.10 percent increase.

Property rose 1.24 percent and Financials, Industrial, and Holding Firms trailed with expansions of 0.90 percent, 0.74 percent, and 0.65 percent, respectively.

Only the Mining and Oil finished the day on the red with a 0.51 percent decline.

Volume for the day reached 1.5 billion shares, with value surging to Php 10.95 billion.

Gainers led losers at 127 to 82 while 49 stocks were unchanged. (Joann Santiago/PNA)