PHILIPPINE SHARES could move lower in the shortened trading week amid bearish sentiment following the hawkish tone of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).
On Friday, the bellwether Philippine Stock Exchange index (PSEi) rose by 0.16% or 10.78 points to close at 6,406.38, while the broader all shares index went up by 0.11% or 4.08 points to 3,675.83.
Week on week, however, the PSEi fell by 3.18% or 210.13 points from the 6,616.51 finish on Dec. 13.
“Hawkish comments from the Fed and the Bangko Sentral ng Pilipinas (BSP) spooked local equities,” online brokerage 2TradeAsia.com said in a market note.
“The local market is turning more bearish as it extended its decline last week… On a positive note, the 6,400 support line still holds,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
For this week, market weakness could persist as investors digest policy hints from both the Fed and the BSP, Mr. Tantiangco said.
“From a fundamental standpoint, the local market has been driven to more attractive levels, giving opportunity to bargain hunters. However, the trimmed rate cut projections of both 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 forecast in its summary of economic projections just two 25-basis-point (bp) cuts for 2025, down from its September view of four cuts, in a nod to the economy’s continued health and sticky inflation, Reuters reported.
Meanwhile, the BSP Monetary Board on Thursday delivered a third straight rate cut, slashing its policy rate by 25 bps to 5.75% from 6%. The central bank has now reduced benchmark borrowing costs by a total of 75 bps this year since it began its easing cycle in August.
BSP Governor Eli M. Remolona, Jr. said delivering 100 bps worth of cuts next year may be “too much” as inflation risks remain.
“The 2025 national budget concerns, if it remains unresolved this week, may also dampen sentiment. Investors are also expected to monitor the movement of the local currency. A further depreciation of the peso is expected to pose downside risks to the market while a recovery is expected to provide the opposite,” Mr. Tantiangco added. He put the market’s immediate support at 6,400 and major resistance at 6,800.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort placed the PSEi’s support at 6,400 and resistance at 7,000.
For its part, 2TradeAsia.com put support at 6,200-6,400 and resistance at 6,500-6,700.
“Expect quiet sessions in the final trading week of the year… 2025 forces and themes are looking to demand more active management styles as the hunt for alpha becomes less straightforward and more challenging,” it said.
Philippine financial markets are closed on Dec. 24-25 for Christmas Eve and Day. — Revin Mikhael D. Ochave with Reuters
