THE MAIN INDEX dropped further on Friday as investors pocketed their profits and repositioned before the long weekend and amid bets on monetary policy easing at home and in the United States.

On Friday, the bellwether Philippine Stock Exchange index (PSEi) fell by 0.11% or 7.13 points to close at 6,383.70, while the broader all shares index rose by 0.13% or 4.75 points to finish at 3,447.75.

Week on week, the PSEi declined by 2.07% or 135.06 points from its 6,518.76 close on June 7.

“The local bourse dropped as investors took more gains, while others chose to stay on the sidelines ahead of the long weekend,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

Philippine financial markets are closed on Monday (June 17) in observance of Eid’l Adha or the Feast of Sacrifice.

“Uncertainty over the direction of the Philippine interest rates in the near term provided negative sentiment following the remarks of Finance Secretary Ralph G. Recto that the Bangko Sentral ng Pilipinas (BSP) may only ease monetary policy after the Fed makes the first cut. This could mean that the current high interest rates may stay longer than anticipated,” Ms. Alviar added.

The BSP will probably cut its policy rate after the Fed, which has signaled it may start easing as late as December, Mr. Recto said last week.

Asked if the BSP would begin its easing cycle once the US central bank cuts rates, Mr. Recto, a member of the Monetary Board, said this was “highly probable.”

The Monetary Board has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023.

The US central bank on Wednesday kept its benchmark overnight interest rate in the current 5.25%-5.5% range, where it has been since last July, Reuters reported. Fed officials pushed out the start of rate cuts to perhaps as late as December, with policy makers projecting only a single quarter-percentage-point reduction for this year.

“A short trading week saw local equities revisit 6,300 levels, after the International Monetary Fund’s lower gross domestic product projection and comments that suggest BSP to follow Fed’s move,” online brokerage firm likewise said in a market note.

“That being said, regional central banks are not fully divorced from the Fed’s and while first half inflation drivers have decelerated, uncertainty related to the impact of La Niña, utility rate hikes, among others, remain valid impediments to any upward lift to sentiment,” added.

The PSEi showed “bearish developments” as it dropped to the 6,300 level, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“With its decline, the bourse has broken below the 6,400 level, which was considered as a support. The market’s 50-day exponential moving average has also gone below its 200-day counterpart… which indicates the possibility of a downtrend moving forward,” Mr. Tantiangco said. — R.M.D. Ochave with Reuters