PHILIPPINE stocks are likely to remain rangebound this week as investors cautiously await policy decisions from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve, analysts said.
Investors will also be monitoring developments in the Middle East that could further influence oil prices and inflation expectations, they added.
Analysts said the benchmark Philippine Stock Exchange index (PSEi), which closed at 5,910.06 points on Thursday, could trade within a narrow range this week, with support seen at 5,800 and resistance at around 6,000 to 6,100.
Any easing of Middle East tensions could improve risk appetite, but investors are expected to take a wait-and-see stance until clearer signals emerge from both the BSP and the Fed.
The Federal Open Market Committee (FOMC) is scheduled to hold a two-day meeting on June 16 and 17, the first Fed meeting run by new Chairman Kevin Warsh. The BSP’s policymaking Monetary Board will hold its own meeting on June 18.
“The market’s next direction hinges on two policy calls — BSP on June 18 and the US Fed on June 17,” online brokerage 2TradeAsia.com said in its weekly market outlook.
The brokerage said consensus expectations were pointing to a 25-basis-point increase in the BSP’s benchmark rate as policymakers seek to contain inflation risks, while the Fed is widely expected to leave rates unchanged.
“Until both decisions land, treat the tape as range-bound and let the outcomes set the trend before taking on aggressive positions,” 2TradeAsia advised investors.
Market sentiment, however, could receive support from signs that war between the United States and Iran may be easing, another market observer said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said investors were increasingly anticipating a possible agreement between the two countries that could help lower global crude oil prices.
He added that US President Donald Trump had indicated a deal could be signed over the weekend or by June 15, while negotiations involving the reopening of the Strait of Hormuz could take place on the sidelines of next week’s Group of Seven summit.
A breakthrough could help ease concerns over energy supply disruptions that have fueled inflation fears and weighed on financial markets in recent weeks, analysts added, but qualified this by saying that monetary policy remained the market’s primary focus.
2TradeAsia said the BSP faced a difficult balancing act between curbing inflation and supporting economic growth, particularly as higher oil prices and second-round effects continue to threaten the inflation outlook.
On the domestic front, investors will be monitoring April overseas Filipino worker remittance data due June 15 for additional clues on consumer spending and economic activity.
Globally, markets will also be tracking a series of key US economic releases, including manufacturing, industrial production, housing, retail sales and labor market data, which could influence expectations for future Federal Reserve policy moves.
Sector-wise, 2TradeAsia said telecommunications stocks could continue to draw interest amid optimism over the implementation of the Konektadong Pinoy Act and developments involving PLDT’s data center business.
Banking shares may also remain in focus following Fitch Ratings’ downgrade of its outlook on the Philippine banking sector, although higher interest rates could support lenders’ net interest margins.
Property stocks, meanwhile, could remain pressured by elevated borrowing costs, while mining and oil stocks are expected to track movements in commodity prices and geopolitical developments.
