PH stocks to take cue from BSP, Fed meetings

Stock market investors are expected to keep a close eye on the policy meetings of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) this week.

The benchmark Philippine Stock Exchange index (PSEi) lost 82.06 points or 1.32% to end at 6,126.34 on Friday, while the broader all shares index slipped by 33.13 points or 0.98% to 3,320.18.

Week on week, the PSEi went down by 96.60 points or 1.55% from its close of 6,222.94 on Sept. 8.

“Hopes that both the Fed and the BSP will keep their policy rates unchanged may somehow give market sentiment a boost,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. 

“Dovish signals are seen to lift the market while hawkish signals may pull the market down.”

The Federal Open Market Committee (FOMC) is widely expected to keep rates unchanged at the end of its two-day policy meeting on Sept. 20. The US central bank raised borrowing costs by 25 basis points (bps) in July, bringing the Fed Funds target rate at 5.25% and 5.5%.

Meanwhile, the Monetary Board (MB) is scheduled to hold a policy-setting meeting on Thursday. The MB has kept rates unchanged at a near 16-year high of 6.25% during its last three meetings.

BSP Governor Eli M. Remolona, Jr. on Thursday said a policy rate hike is unlikely despite the uptick in August inflation.

A BusinessWorld poll last week showed 14 of 17 analysts see the Monetary Board keeping benchmark rates steady, while three analysts expect a 25-bp rate hike.

“Post-monetary policy meeting price action could drive longer-term trend. We may see the market start (this week) with gains, given the removal of selling pressure from FTSE (Financial Times Stock Exchange) rebalancing-related flows,” China Bank Securities Corp. Research Associate Lance U. Soledad said in an e-mail on Friday.

Mr. Tantiangco said investors may also take their cues from the release of the BSP’s Business and Consumer Expectations Surveys on Friday.

For the rest of the week, Mr. Soledad said volatility is expected to be elevated ahead of and following the FOMC and the MB’s policy meetings.

“Should we see upbeat price action after these key events, then that could indicate that a near-term trough had been reached and could significantly improve buying appetite — warranting more active accumulation in index heavyweights,” Mr. Soledad said.

The PSEi is expected to test the 6,150 level.

“If the market is able to get back above the said line, it is seen to continue trading within 6,150-6,400. If it fails to do so, however, the market’s new trading range is seen from 6,000-6,150,” Mr. Tantiangco said.

For this week, Mr. Soledad placed PSEi’s resistance at 6,350-6,370. — S.J.Talavera