Central banks, Trump win cause market turmoil

By Revin Mikhael D. Ochave, Reporter

PHILIPPINE STOCKS ended 2024 on a cautious note following a tumultuous year for the market as many global central banks began their monetary easing cycles.

The bellwether Philippine Stock Exchange index (PSEi) slipped by 0.15% or 10.23 points to close at 6,528.79 on Friday, the last trading day of 2024, while the broader all shares index gained by 0.44% or 16.73 points to 3,748.51. Week on week, the PSEi rose by 1.9% or 122.41 points versus its 6,406.38 finish on Dec. 20.

Year on year, the PSEi was higher by 1.2% or 78.75 points from its end-2023 finish of 6,450.04.

The index posted its highest close for 2024 on Oct. 7, ending at 7,554.68. On the other hand, its worst showing this year was its 6,158.48 finish on June 21.

“We managed to end the year higher versus the previous year, our first yearly gain since 2019. It’s a small win, but a win nonetheless,” AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message.

“Monetary policy was the key driver this year, with an almost laser focus on interest rates.”

The Bangko Sentral ng Pilipinas in August cut rates for the first time since 2020, reducing benchmark borrowing costs by 25 basis points (bps). It made two more 25-bp reductions at its October and December meetings that brought the policy rate to 5.75%.

Meanwhile, the US central bank began its easing cycle in September with a big 50-bp cut and followed it up with 25-bp reductions at each of its November and December meetings, bringing the fed funds rate to 4.25%-4.5%.

Seven of the world’s 10 major, developed-market central banks cut rates this year, with only Australia and Norway still on hold, Reuters reported. Japan, the outlier, is in hiking mode. The Bank of Japan delivered its first rate hike in 17 years in March, ending years of ultra-loose policy.

“It was a bittersweet culmination to a volatile year marked by steep rallies and corrections as hope turned into caution,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet added in a Viber message. “Just like 2023, this year again turned out to be fairly good for investors who were able to trade in and out of the major market waves.”

Philippine stocks began 2024 on a positive note “because of falling inflation and optimism regarding the beginning of the rate cutting cycle,” COL Financial Group, Inc. Chief Equity Strategist April Lynn Lee-Tan said.

“However, sentiment turned negative following the release of weaker than expected third quarter gross domestic product, disappointing third quarter earnings results, and concerns regarding the impact of a Trump presidency on Asian economies,” she said.

Donald J. Trump is set to be inaugurated as the 47th US President on Jan. 20. He has vowed to impose steep tariffs on goods coming from China, Mexico, and Canada and to raise levies on European Union nations. — with Reuters