Stock market zooms to all-time high

MANILA, Philippines – The local stock market zoomed to a historic high after it closed at 3,902.56 as a powerful rally overseas and upbeat economic data bolstered investors’ confidence, with some analysts proclaiming the birth of a new bull market.

The bears are being routed worldwide as investors find plenty of reasons to buy stocks and not many reasons to sell. Analysts are now looking at the next resistance level of 4,100 after breaking past the bull market peak.

The Philippine Stock Exchange index surged by 97.83 points or 2.57 percent yesterday to close at 3,902.56, already topping analysts’ full year forecast of 3,800. A total of 2.16 billion shares worth P6.37 billion changed hands.

Gainers led losers 100 to 35, while 49 issues ended unchanged.

For the last eight days, the PSEi gained a total of 343.89 points or 9.66 percent.

The PSEi has already grown by 849.88 points or 27.84 percent since the start of the year.

Most Asian markets ended in positive territory as European debt woes eased and US stocks closed firm overnight. Australia’s All Ordinaries gained almost one percent on the back of improved employment numbers reinforcing faith in the resiliency of their economy amid a shaky global confidence on recoveries.

“The PSEi broke new records on the back of robust economic indicators which solidifies the Philippine economic resiliency story. We continue to be inspired by the market’s performance which supports the reforms we have put in place,” PSE president and chief executive officer Val Antonio B. Suarez said.

Accord Capital Equities Inc.’s Jun Calaycay said the market’s continued winning streak suggests that it is in the early stages of a healthy bull market.

“Correction-watchers will have to wait another week to an already extended wait. The evidence was glaringly suggesting the bull. Value turnover have consistently risen, foreign funds have been flowing in and sentiments have remained positive even on days following huge overnight losses in the Dow,” Calaycay said.

“As we have noted in recent reports, there is an obvious bias for fundamentals given the strong outlook for the over-all economy. The already promising projections glimmer even more in the context of a sustained, albeit slow, global recoveries,” Calaycay said.

Calaycay, however, cautioned that the market is susceptible to profit-taking as most issues have reached overbought levels but sees the correction as an opportunity to stock up on laggard issues.

“We continue to be on the look-out however on a possible profit-taking-induced pullback given the extent of the advances across-the-board. It will be interesting to look at the laggards for a possible catching up. Proceeds from profit-taking may likely be channeled to such counters. It will be an interesting market to look forward to next week,” he said.

Meanwhile, US stocks closed higher on Wednesday as renewed confidence in the European economy outweighed a new report saying the US economy was slowing down.

The Dow Jones Industrial Average gained 46.32 points (0.45 percent) to 10,387.01 in closing trades, while the broader S&P 500 index gained 7.03 points (0.64 percent) to 1,098.87 points.

The tech-rich Nasdaq composite index was up 19.98 points (0.90 percent) to 2,228.87.

Trade opened with strong gains after news that the Portuguese government successfully issued debt bonds eased concerns over the euro-zone economy which were sparked on Tuesday over a report on the European banking system.

The reassuring news from Europe was later slightly dampened with the release of the Federal Reserve’s beige book report that said the US economy is showing “widespread” signs of deceleration.

The central bank reported “continued growth in national economic activity” between mid-July and the end of August, “but with widespread signs of a deceleration.”

Painting a dour picture of the economy, as expected, the Fed said the recovery continued to be uneven across the country and across sectors.

“The economy is slowing but quite a significant degree of the slowing has already been anticipated by the market,” said Zach Pandl, analyst at Nomura Global Economics.

“Unless the slowing becomes quite disorderly or abrupt the market should maintain the current levels… The beige (book) was not news as much as it was confirmation of what we already knew.”

The Fed report included some good news from the manufacturing sector and the slightest of signs that Americans might be returning to the shops. –Zinnia B. Dela Peña (The Philippine Star)