PHILIPPINE STOCKS may continue to move sideways this week before the US Federal Reserve’s policy meeting, where it is expected to deliver a much-awaited rate cut, and amid corruption concerns at home.
On Friday, the Philippine Stock Exchange index (PSEi) declined by 0.28% or 17.68 points to close at 6,109.21, while the broader all shares index dropped by 0.16% or 6.14 points to 3,685.59.
Week on week, the PSEi also went down by 39.92 points from its 6,149.13 close on Sept. 5, marking its fifth straight week in the red.
“The market stayed relatively flat [last] week, with no major domestic catalysts driving momentum. Although US inflation came in lower than expected, boosting hopes for near-term Fed rate cuts, the Philippine market has so far shown little reaction,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “In contrast, US equities rallied to fresh record highs, with the S&P 500, Nasdaq, and Dow all advancing as easing inflation reinforced optimism for a more accommodative policy stance.”
The Nasdaq notched a record high close on Friday in a mixed trading session as investors looked ahead to the US Federal Reserve’s policy meeting this week, when it is widely expected to cut interest rates to counter a slowdown in the jobs market, Reuters reported.
Investors are laser-focused on the Fed’s meeting on Tuesday and Wednesday. Traders expect the central bank to cut interest rates by 25 basis points (bps) after recent data showed longstanding weakness in hiring and easing inflation concerns.
Following signs of a worsening jobs market, interest rate futures reflect expectations of cuts totaling 75 bps by the end of the year.
The Fed has kept its target rate at the 4.25%-4.5% range since December 2024.
“Local political headlines on controversies from flood control projects were negated by expectations for the Fed’s policy easing [this] week, leading to flat gauges,” online brokerage 2TradeAsia.com said in a market note.
For this week, the Fed’s meeting will be in the spotlight, it said.
“Global markets enter the week with focus squarely on the Fed’s Sept. 16-17 meeting, where a 25-bp rate cut appears nearly locked in, buoyed by cooling inflation data and a softening labor market,” 2TradeAsia.com said.
“At home, the government’s intensified anti-corruption push further gains momentum. It is noted that spotlighted scandals especially in big ticket infra, in the short-term, may impair cold money flows as overseas funds adopt a wait-and-see stance, pending clearer budget transparency and project viability, potentially pressuring the peso and curbing inflows,” it said.
2TradeAsia.com put the PSEi’s immediate support at 6,100 and resistance at 6,300 for this week.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort placed the PSEi’s immediate support at 6,105 and resistance between 6,230 and 6,915.
He said investors are likely to stay cautious amid domestic corruption concerns. — A.G.C. Magno