Fed, BSP easing bets to propel Philippine stocks
PHILIPPINE SHARES are expected to sustain their upward trajectory this week as rate cut bets here and in the United States continue to boost investor sentiment, analysts said.
On Friday, the Philippine Stock Exchange index (PSEi) rose by 0.59% or 38.99 points to end at 6,648.23, while the broader all shares index increased by 0.57% or 20.54 points to finish at 3,576.22.
Week on week, the PSEi climbed by 2.39% or 155.48 points from its 6,492.75 finish on July 5.
“The market picked up where it left off, mimicking Wall Street’s ascent following the decline in US inflation,” online brokerage firm 2TradeAsia.com said in a note.
US consumer prices fell for the first time in four years in June amid cheaper gasoline and moderating rents, firmly putting disinflation back on track and drawing the US Federal Reserve another step closer to cutting interest rates in September, Reuters reported.
The consumer price index (CPI) dipped 0.1% last month, the first drop since May 2020, after being unchanged in May, the Labor department’s Bureau of Labor Statistics said.
In the 12 months through June, the CPI climbed 3%, the smallest gain since June 2023. That followed a 3.3% advance in May. Economists polled by Reuters had forecast the CPI ticking up 0.1% and gaining 3.1% year on year.
For this week, the local bourse could move with an upward bias amid rate cut bets in both the US and at home, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
“Optimism driven by expectations that the Bangko Sentral ng Pilipinas (BSP) will ease monetary policy soon may continue to fuel the market,” Mr. Tantiangco said. “The record performances on Wall Street, if sustained, are also expected to provide positive spillovers to the local market.”
Last month, BSP Governor Eli M. Remolona, Jr. said the Monetary Board may deliver its first rate cut in over three years at its Aug. 15 review — the only policy meeting scheduled in the third quarter — as they expect inflation to continue easing this semester.
He said the Monetary Board could reduce borrowing costs by 25 basis points (bps) in the third quarter and by another 25 bps in the fourth quarter.
However, bargain hunting could halt the PSEi’s rise, Mr. Tantiangco added.
“The three-week rally gives opportunities for those with short-term horizons to book gains. At its current level, the local market is still deemed attractive. Hence, we also see bargain hunting possibilities, especially for long-term investors,” he said.
Mr. Tantiangco put the PSEi’s major support at 6,400 and resistance at 6,700.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort placed the market’s immediate major support at 6,345-6,405 and immediate major resistance at 6,720.
For its part, 2TradeAsia.com put the PSEi’s support at 6,500 and resistance at 6,750-6,800. — R.M.D. Ochave with Reuters
