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Volatility expected as focus shifts to Fed review

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THE Philippine Stock Exchange — PHOTO BY SANTIAGO J. ARNAIZ

By Arra B. Francia, Reporter

INVESTORS will be looking at the US Federal Reserve’s statement at the close of its policy meeting amid an expected thinner trading volume due to the shortened trading week.

The benchmark Philippine Stock Exchange index (PSEi) was up for a second straight day on Monday, rising 0.39% or 30.56 points to 7,771.30. This was amid thinner trading valued at only P4.01 billion, significantly lower than the P5.28-billion turnover seen last Friday.

Financial markets were closed on Tuesday for Independence Day. Trading will once again be suspended on Friday for the Islamic Eid al-Fitr holiday.

“Expect volatile sessions during a three-day trading week, as focus reverts on the international scene,” online brokerage 2TradeAsia.com said, noting the June 12-13 meeting of the US Federal Open Market Committee (FOMC).

The online brokerage said it expects the FOMC to maintain interest rates for now.

“Our view is for a status quo to be adopted for now, set against parallel issues on trade… Also, inflation expectations will be balanced out with the effects of tax cuts implemented at the start of 2018,” the company said.

Meanwhile, Regina Capital Development Corp. Managing Director Luis A. Limlingan noted several economic data to be released this week.

“Investors will be paying close attention to key economic releases this week such as the CPI (consumer price index) report on Tuesday and retail sales on Thursday. In addition, the June FOMC statement will be released on Wednesday at 2:00 PM EDT, followed by Chairman [Jerome] Powell’s press conference at 2:30 PM,” Mr. Limlingan said in a mobile phone message.

At the local front, 2TradeAsia.com is looking at more mergers and acquisitions in the second half of the year.

“Meanwhile, key catalysts at home will be on fiscal spending rollout in the second half of 2018, including increased windows for mergers and acquisition stories that would help improve capital efficiency and competency alliance to outstrip business costs,” the online brokerage firm said.

On the other hand, Regina Capital’s Mr. Limlingan said investors will also be looking at remittances data due for release by the Bangko Sentral ng Pilipinas next week.

Trading at Wall Street was also relatively flat on Monday. The Dow Jones Industrial Average added 0.02% or 5.78 points to 25,322.31. The S&P 500 index gained 0.11% or 2.97 points to 2,782, while the Nasdaq Composite Index also rose 0.19% or 14.41 points to 7,659.92.

Asian markets, meanwhile, were seen adopting a wait-and-see mode on the developments of the meeting between US President Donald J. Trump and North Korean leader Kim Jong Un. Both leaders are currently in Singapore for deals on denuclearization.