Strong Q2 growth fires up trade

Despite falling on the lower end of the range, most of the headwinds were caused by global inflationary pressures, and importation costs

New York Stock Exchange kicks off activity at the opening bell on a typical trading day on Wall Street in New York City. Stocks finished mixed Monday after an early rally fizzled as investors await crucial inflation data out later this week. The government is scheduled to release consumer price numbers for July on Wednesday. | ANGELA WEISS/Agence France-Presse

Traders work on the floor of the New York Stock Exchange (NYSE) at the opening bell on August 5, 2022 at Wall Street in New York City. – Stock markets slid Friday as a much stronger-than-expected US jobs report raised the prospect that the Federal Reserve will maintain its aggressive monetary policy to combat inflation. (Photo by ANGELA WEISS / AFP)

Market activity was supported by the release of the second quarter gross domestic product (GDP), which showed the economy continuing to withstand the global turmoil, with the latest print at 7.4 percent.

The Philippine Stock Exchange index closed at 6,468.97, up by 34.73 points on turnover of P5.25 billion.

Despite falling on the lower end of the range, most of the headwinds were caused by global inflationary pressures, and importation costs, Regina Capital Development Corp. managing director Luis Limlingan said.

Private consumption remained robust at 8.6 percent, and may have been higher if not for higher fuel prices, while government consumption also picked up at 11.1 percent vs 3.6 percent in the first quarter.

The local market also received a boost as traders assessed the outlook for rate hikes.

Investors were also trying to look for some clarity from the US Federal Reserves as to how it’s going to pace the rate hikes once the July consumer price index is released.

Positive bias

Regional equities mostly rose but investors moved cautiously ahead of US inflation data later in the week, after a jobs report suggested the Federal Reserve would likely need to continue its sharp interest rate hikes to tame runaway prices.

A rally across global markets from June lows appeared to have hit the buffers after Friday’s forecast-busting employment reading showed the world’s top economy remained resilient but it meant more monetary tightening was on the cards.

There had been a hope that recent weak data, including one showing the economy contracted for two straight quarters, would allow the bank to take its foot off the pedal in lifting borrowing costs, and possibly begin cutting in 2023.

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