Stock market rises; BDO, Ayala top gainers

PSEi May 19, 2023

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STOCKS rose Friday in line with a global rally as traders grow increasingly hopeful that US lawmakers will hammer out a deal to lift the debt ceiling and avert a calamitous default.

The PSE index, the 30-company benchmark of the Philippine Stock Exchange, gained 35 points, or 0.54 percent, to close at 6,664.55 as four of the six subsectors advanced.

The index, representing all shares, went

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up 13 points, or 0.39 percent, to settle at 3,548.37 on a value turnover of P5.77 billion. Gainers matched losers at 84 apiece, while 65 issues were unchanged.

Seven of the 10 most active stocks ended in the green, led by BDO Unibank Inc. which climbed 2.56 percent to P140.00 and Ayala Corp. which rose 1.61 percent to P694.00.

Most Asian markets rose, but the regional mood was tempered by losses in Hong Kong and Shanghai fuelled by worries over China’s economy.

After weeks of lumbering talks on Capitol Hill, congressional leaders appeared ready to put a proposal to lawmakers before the government runs out of cash, said to be around June 1.

In his most upbeat remarks yet on the high-stakes standoff, Republican House Speaker Kevin McCarthy said: “We’re not there -- we haven’t agreed to anything yet -- but I see the path (where) we could come to an agreement.”

McCarthy secured the Speaker’s gavel in January by pledging to his party’s ultra-conservative Freedom Caucus that any raise in the borrowing limit would only come with an evisceration of the federal budget. He and Democratic Senate Leader Chuck Schumer were planning to call for a vote in the coming days, and on Friday, a White House official said “steady progress” was being made.

The optimism was shared by other lawmakers, with Texas Republican Kay Granger saying a deal was “close”. And Democrat Steny Hoyer said: “I think we are going to get a deal”.

But McCarthy ally Patrick McHenry, chairman of the US House Financial Services Committee, warned the two sides were “not close to being done”.

Still, all three main indexes on Wall Street rallied, extending the more than one percent gains enjoyed Wednesday.

In Asia, Tokyo raced higher again, building on a recent surge in the Nikkei to a three-decade high even as data showed Japanese inflation continued to sit well above the central bank’s target, adding to pressure for it to tighten monetary policy. With AFP

UK unveils £1b semiconductor diversification

LONDON, United Kingdom—The British government on Friday unveiled a new £1 billion semiconductor strategy to invest in infrastructure, research and security as the UK tries to diversify its chip supply chain.

The plan would “safeguard supply chains from disruption and protect tech against national security risks”, the UK government’s department for business, energy and industrial strategy said in a statement.

The investment over the next decade would include up to £200 million ($215 million) between now and 2025.

The new 20-year strategy would “boost the UK’s strengths and skills in design, R&D and compound semiconductors while helping to grow domestic chip firms across the UK”, the department added.

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Japan inflation hit 3.4% in April to meet market expectations

TOKYO—Japan’s consumer prices rose 3.4 percent on-year in April, in line with market expectations, government data showed Friday.

The figure, which excludes volatile fresh food prices, followed a 3.1 percent rise recorded in both March and February.

Inflation in Japan is lower than the sky-high price increases seen in the United States and elsewhere that have prompted central banks to hike interest rates. Yet it remains higher than the Bank of Japan’s two percent target, which has been surpassed every month since April last year.

The Japanese central bank argues that the price rises are fueled by temporary factors, such as the war

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in Ukraine, and so has stuck to its monetary easing policies in a bid to encourage sustained growth.

Analysts said the price increases would likely continue to slow from a January peak, when inflation measured 4.2 percent on-year -- the highest level since September 1981, fueled in part by higher energy bills.

Earlier this week, data showed Japan’s economy grew a faster-thanexpected 0.4 percent in the first quarter, helped by a recovery in inbound tourism after pandemic border restrictions were lifted in October.

The BoJ last month announced a review of its longstanding easing measures under new governor Kazuo Ueda, but said it would maintain them for the time being.

Excluding energy, the data released by Japan’s internal affairs ministry on Friday showed prices rose 4.1 percent in April, after a 3.8 percent rise in March. Increases in the cost of processed foods, durable goods and telecommunication fees, among other categories, contributed to inflation, it showed.

“Core CPI will likely remain in the level of 3.0-3.5 percent until this summer” due to high resource costs and the impact of the weak yen, said Saisuke Sakai, chief economist of Mizuho Research and Technologies.

But “in the latter half of this fiscal year and beyond, rises in core CPI will likely slow, reflecting falls in prices of import goods, led by energy prices,” he said before the data release. AFP

It comes as European carmaker Stellantis has warned it could close some UK factories should the British government fail to tweak Brexit trade rules to ease the supply of batteries for electric vehicles, for which semiconductor technology is a key part.

Visiting Tokyo Thursday, British Prime Minister Rishi Sunak announced Japanese investment of more than $22 billion into the UK, but accepted carmakers’ concerns about Brexit trade rules as he confirmed talks with the European Union.

“Semiconductors underpin the devices we use every day and will be crucial to advancing the technologies of tomorrow,” Sunak was quoted as saying in the statement.

“Our new strategy focuses our efforts on where our strengths lie, in areas like research and design, so we can build our competitive edge on the global stage,” he added. AFP