Philippines stocks are expected to trade sideways after the previous week’s decline as investors await direction on policy rates in the upcoming Monetary Board meeting this week.
“The markets would take cue for the upcoming BSP [Bangko Sentral ng Pilipinas] monetary-policy-setting meeting on Thursday, May 16, 2024, and the latest signals on local monetary authorities on possible rate cuts later in 2024 or 2025,” Rizal Commercial Banking Corp. chief economist Michael Ricarfort said.
Ricafort said while the BSP would likely match the latest US Federal Reserve’s rate pause for the 6th straight month on May 1, 2024 and would match any possible future Fed rate cuts later in 2024 and in 2025, investors remained cautious due to higher-for-longer signals from some Fed officials recently.
“The markets recently priced in about 1-2 Fed rate cuts over the past 2 weeks, so more dovish signals would be welcomed by the markets, in view of mostly softer-than-expected local inflation, gross domestic product, employment, trade, manufacturing recently,” Ricafort said.
The bellwether Philippine Stock Exchange index plummeted by 103.62 points, or 1.6 percent, to close at 6,511.93 last week, on higher April inflation rate and lower-than-expected first quarter GDP growth.
Meanwhile, the market’s decline could also provide opportunity for bargain hunting which could lead for possible upward correction.
The positive earnings growth of listed firms also provide catalyst for possible rebound. Average turnover reached P6.5 billion, while foreign selling slowed to P610 million.
The market’s immediate support is at 6,400 this week while resistance is at 6,700 to 6,800.
