Stocks climb on surge in US yields, vaccine arrival

LOCAL STOCKS climbed on Monday as investors chose to stay in the market after yields on US bonds surged last week.

The Philippine Stock Exchange index (PSEi) climbed 78.11 points or 1.15% to finish 6,872.97 on Monday, while the all shares index went up by 45.1 points or 1.09% to close at 4,165.4.

“Shares in the Philippine market closed on the positive as an outsized surge in bond yields spooked investors, who rushed to dump risk assets, especially high-flying technology names,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message on Monday.

“The major US averages tumbled in rapid fashion as the 10-year Treasury yield soared as high as 1.6% in a sudden move that some described as a ‘flash’ spike,” Mr. Limlingan added.

Yields on the benchmark 10-year US Treasuries surged above 1.6% last week for the first time in a year amid weaker-than-expected bids for offered seven-year notes, Reuters reported. However, US bond yields slid sharply on Monday, with the benchmark 10-year US Treasury yield falling about 5 basis points to 1.403%, off Thursday’s one-year high of 1.614%.

COL Financial Group, Inc. Chief Technical Analyst Juanis G. Barredo said the easing of US yields boosted sentiment on the local market as it eased investor concerns.

“Progress on the inoculation of the vaccines that recently arrived may have improved the sentiment,” AAA Southeast Equities, Inc. Research Head Christopher John J. Mangun added in an e-mail.

“The Philippine manufacturing sector recorded its second month of expansion in February as manufacturers rebuilt their inventory in anticipation of increased demand. This also confirmed the economy’s recovery to investors,” he added.

All sectoral indices went up on Monday. Holding firms climbed by 96.05 points or 1.38% to 7,016.13; industrials added 86.71 or 1% to finish at 8,742.05; property went up by 33.47 points or 0.96% to 3,490.61; financials rose 13.38 points or 0.9% to 1,490.57; mining and oil increased by 49.2 points or 0.52% to 9,380.87; and services inched up by 6.48 points or 0.44% to end at 1,459.84.

Value turnover declined to P8.34 billion on Monday with 8.72 billion shares switching hands from the P13.74 billion with 12.28 billion issues traded on Friday.

“Trading volumes declined as some investors opted to stay on the sidelines because of the uncertainty,” Mr. Mangun said.

Advancers outnumbered decliners, 149 versus 76, while 48 names closed unchanged.

Net foreign selling went down to P861.24 million on Monday from P972.65 million recorded the previous trading day.

Mr. Mangun said the local index may move towards the 7,000 mark in the coming days.

Meanwhile, COL Financial’s Mr. Barredo said he expects the market to close at 6,980 to 7,100. — Keren Concepcion G. Valmonte with Reuters