Stocks to move sideways with Fed, BSP in focus

PHILIPPINE STOCKS may continue to move sideways this week, with investors looking ahead to the policy meetings of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).

On Thursday, the Philippine Stock Exchange index (PSEi) went down by 0.52% or 31.30 points to close at 5,910.06, while the broader all shares index fell by 0.44% or 14.56 points to end at 3,289.95.

Week on week, the PSEi decreased by 28.32 points from June 5’s finish of 5,938.38.

Philippine financial markets were closed on June 12 (Friday) for Independence Day.

“The local market extended its decline as tensions in the Middle East continue to escalate. This comes as the US strikes Iran as the two remain without a deal. Iran as a response completely closed the Strait of Hormuz again posing upside risks to global oil prices,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said on Thursday.

For this week, F. Yap Securities, Inc. said market movements will largely depend on the outcomes of the Fed and BSP policy meetings. The Federal Open Market Committee meets on June 16-17, while the BSP will hold its own review on June 18.

“Until both decisions land, treat the tape as range-bound and let the outcomes set the trend before taking on aggressive position,” it said in a market note.

The US Federal Reserve is expected to hold rates steady this week at Kevin M. Warsh’s first meeting as Fed chair, with a strong majority of economists in a Reuters poll predicting that the US central bank would keep rates unchanged for the rest of 2026.

Traders, however, have fully priced in a 25-basis-point (bp) hike by December, a sharp turn from expectations of two rate cuts this year before the Iran war erupted at the end of February.

Meanwhile, a BusinessWorld poll of 20 analysts showed that 19 expect a second straight rate hike from the BSP’s policy-setting Monetary Board on Thursday, with 15 seeing a 25-bp bump and four penciling in a bigger 50-bp increase amid persistent price pressures.

“As with anything concerning event risk, the ‘boring’ 25-bps option is the preferred outcome just in terms of short-run market volatility, as more aggressive posturing risks signaling monetary panic and disrupting already fragile local credit channels,” F. Yap Securities said.

“Low visibility policy road ahead with the US-Iran war still humming in the background means easing off on the gas pedal. A no-frills 25-bps BSP cut plus a steady Fed message is preferred to support base-building towards 6,000.”

It added that the PSEi’s support remains at the 5,750-5,800 range, barring a surprise from either the BSP or Fed.

US and Pakistani leaders forecast a Sunday signing of a long-elusive framework agreement to end fighting between the United States and Iran, but Tehran cast doubt over the timing and hardline protesters in Iran voiced opposition, Reuters reported. — Alexandria Grace C. Magno