November 23, 2017 | MANILA, PHILIPPINES

Stocks end flat as Fed chief signals ‘gradual’ hikes

LOCAL SHARES traded sideways on Thursday after the much anticipated testimony of Federal Reserve Chair Janet L. Yellen to the US Congress failed to serve a catalyst to drive the market beyond the 8,000 level.

The bellwether Philippine Stock Exchange index (PSEi) ended almost flat, inching down 0.01% or 1.52 points to 7,936.85.

The broader all shares index likewise slipped 0.02% or 0.95 point to 4,753.72.

“The PSEi closed the day on a flat note after Federal Reserve Chairwoman Janet Yellen said the Fed won’t need to raise interest rates as high as previous cycles amid an uncertain inflation outlook,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message on Thursday.

Manuel Antonio G. Lisbona, president of PNB Securities, Inc., said markets remained in consolidation phase as Ms. Yellen’s statements were “largely” ignored by players.

“The Fed’s ‘gradual’ approach to a rate hike served to buoy the market somewhat as well,” Mr. Lisbona said yesterday in a text message.

The US economy is healthy enough for the Fed to raise rates and begin winding down its massive bond portfolio, though low inflation and a low neutral rate may leave the central bank with diminished leeway, Ms. Yellen said on Wednesday.

In what may be one of her last appearances before Congress, Ms. Yellen depicted an economy that, while growing slowly, continued to add jobs, benefited from steady household consumption and a recent jump in business investment, and was now being supported by stronger economic conditions abroad.

The Fed “continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time,” Ms. Yellen said in her prepared testimony. Reductions in the Fed’s portfolio of more than $4 trillion in securities are likely to begin “this year,” she said.

Sectoral indices were mixed. Services declined 0.59% or 10.11 points to 1,692.63; industrials fell 0.11% or 13.01 points to 11,132.91; and property edged down 0.06% or 2.44 points to 3,729.21.

On the other hand, holding firms climbed 0.08% or 6.99 points to 7,917.90; financials rose 0.06% or 1.33 points to 1,973.16; mining and oil went up 0.04% or 5.20 points to 12,744.01.

Losers outnumbered advancers, 105 to 88, while 56 names closed unchanged.

Value turnover dropped to P9.23 billion yesterday from the P9.35 billion registered on Wednesday as 1.99 billion shares changed hands.

Foreigners turned sellers anew with a net outflow of P296.71 million, from Wednesday’s net purchases worth P241.66 million.

Southeast Asian stock markets rose on Thursday, in line with broader Asia, as investors were relieved that Ms. Yellen indicated a more gradual tightening of monetary policy. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2% to its highest since mid 2015. -- J.C. Lim with Reuters