PHILIPPINE SHARES may drop in a shortened trading week amid bearish sentiments following the hawkish tone of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).
On Friday, the bellwether Philippine Stock Exchange (PSEi) index rose 0.16% or 10.78 points to close at 6,406.38, while the broader index of all shares rose 0.11% or 4.08 points to 3,675.83.
However, week by week, the PSEi fell by 3.18% or 210.13 points from the end of 6,616.51 on Dec. 13.
“Hawkish comments from Fed and Bangko Sentral ng Pilipinas (BSP) hurt local equities,” online trading 2TradeAsia.com said in the market book.
“The local market is changing sharply as it extends its decline from last week … On a positive note, the support line of 6,400 is still holding,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
This week, market weakness may continue as investors digest policy advice from the Fed and the BSP, said Mr. Tantiangco.
“From a fundamental point of view, the property market has reached very good levels, which provides an opportunity for bargain hunters. However, the speculation of the Federal Reserve and the Bangko Sentral ng Pilipinas may weigh on the market,” he said.
On Wednesday, the Fed announced its third interest rate cut of the year but predicted in its summary of economic projections just two 25-basis-point (bp) cuts in 2025, up from its September outlook of four cuts, in a nod to continued health and inflation. sticky, reports Reuters.
Meanwhile, the BSP Monetary Board on Thursday introduced its third straight rate cut, lowering its policy rate by 25 bps to 5.75% from 6%. The central bank has now cut its benchmark borrowing costs by a total of 75 bps this year since easing in August.
BSP Governor Eli M. Remolona, Jr. he said delivering a 100 bps cut next year may be “too much” as inflation risks remain.
“The national budget for 2025, if it remains unresolved this week, may dampen sentiment. Investors are expected to monitor the flow of local currency. A further depreciation of the peso is expected to create risk in the market while the recovery is expected to provide the opposite,” added Mr. Tantiangco. He placed immediate market support at 6,400 and major resistance at 6,800.
At that time, the Chief Expert of Rizal Commercial Banking Corp. Michael L. Ricafort placed PSEi support at 6,400 and resistance at 7,000.
On the other hand, 2TradeAsia.com put support at 6,200-6,400 and resistance at 6,500-6,700.
“Expect quiet moments in the last trading week of the year… Energy and themes for 2025 look to seek active management styles as the hunt for alpha slows down and becomes more challenging,” it said.
Philippine stock markets close on Dec. 24-25 Christmas Eve and Day. – Revin Mikhael D. Ochave with Reuters
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