SHARES might persist in rising this week after accommodative remarks from the US Federal Reserve chair during the weekend, alongside expectations that the Bangko Sentral ng Pilipinas (BSP) will implement a third successive rate reduction on Thursday.
On Friday, the leading Philippine Stock Exchange index (PSEi) increased by 0.05% or 3.71 points, finishing at 6,281.58, while the broader all shares index advanced by 0.06% or 2.44 points to 3,737.58.
However, week on week, the PSEi fell by 0.54% or 34.35 points from its closing of 6,315.93 on August 15.
The stock market remained closed on Monday in observance of National Heroes’ Day.
“Local equities moved sideways throughout a shortened week as traders exercised caution prior to Fed Chairman Jerome H. Powell’s statements at the Jackson Hole summit,” stated online brokerage 2TradeAsia.com in a market update.
Mr. Powell, during a highly anticipated address at the Fed’s annual Jackson Hole event on Friday, hinted at a possible interest rate reduction during the central bank’s upcoming meeting, as reported by Reuters.
Mr. Powell’s dovish stance has led futures to reflect an 84% probability of a quarter-point rate decrease in September, alongside at least 100 basis points (bp) of easing toward 3.25-3.5% by mid-next year.
2TradeAsia.com indicated that Mr. Powell’s address could influence this week’s trading environment, placing PSEi’s support at 6,300 and resistance at 6,600.
Philstocks Financial Inc. Research Manager Japhet Louis O. Tantiangco conveyed via Viber that Mr. Powell’s dovish approach may stimulate purchasing activity in the stock market this week.
“Anticipation of a rate reduction by the Bangko Sentral ng Pilipinas in their Monetary Board meeting [this] week might also enhance investor sentiment. Traders are also likely to seek insights on the BSP’s policy direction during this meeting,” he remarked.
All 20 analysts in a BusinessWorld survey predict the Monetary Board will lower the target reverse repurchase rate by 25 bps to 5% from the current 5.25% during its policy session on Thursday.
This will mark the BSP’s third consecutive 25-bp reduction since April. It has decreased benchmark interest rates by a cumulative 125 bps since initiating its easing cycle in August 2024.
Mr. Tantiangco identified the PSEi’s key support at 6,150 and key resistance at 6,400.
“From a chart perspective, the local market continues to exhibit a bearish bias as it keeps forming lower highs… The market is anticipated to keep testing these levels this week,” he indicated. “Securing these levels with strong trading activity is seen as the market’s primary goal to gain further elevation moving forward.”
On his part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort set the index’s support at 6,204.04 and resistance at 6,370.
Mr. Ricafort noted that the market will be vigilant for policy signals from both the BSP and the Fed, as potential rate reductions by the US central bank could encourage further easing locally. — R.M.D. Ochave with Reuters
