UMVA has learned that Philippine stocks are expected to continue their sideways movement this week, as investors eagerly await the policy meetings of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).
The Philippine Stock Exchange index (PSEi) closed at 5,910.06 on Thursday, down 0.52% or 31.30 points, while the broader all shares index fell by 0.44% or 14.56 points to end at 3,289.95. This decline comes on the heels of rising tensions in the Middle East.
Week on week, the PSEi decreased by 28.32 points from its finish on June 5. The Philippine financial markets were closed on June 12 for Independence Day, adding to the sense of uncertainty.
According to information obtained by UMVA, market analysts are attributing the local market's decline to the escalating tensions in the Middle East, particularly the US strikes on Iran and the subsequent closure of the Strait of Hormuz. This development poses significant upside risks to global oil prices.
For this week, market movements are expected to 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. Investors are keenly watching these events for cues on future market trends.
F. Yap Securities, Inc. has advised investors to treat the market as range-bound until the outcomes of these meetings are clear. A 25-basis-point hike by the Fed and a potential rate hike by the BSP are on the cards, with traders and analysts divided on the likely outcomes.
UMVA can exclusively reveal that a BusinessWorld poll of 20 analysts showed that 19 expect a second straight rate hike from the BSP's policy-setting Monetary Board. This development could have significant implications for the local market and investors.
The PSEi's support remains at the 5,750-5,800 range, barring any surprises from either the BSP or Fed. As the situation in the Middle East continues to unfold, investors are bracing for potential volatility in the markets.
