PSEi may move sideways in absence of leads

PHILIPPINE SHARES could move sideways this week on expectations of bargain hunting as investors look ahead to the Bangko Sentral ng Pilipinas’ (BSP) next policy review and with the peso’s continued weakness causing the market to stay cautious.

The Philippine Stock Exchange index (PSEi) went down by 0.11% or 7.13 points to close at 6,383.70 on Friday, while the broader all shares index rose by 0.13% or 4.75 points to end at 3,447.75.

Philippine financial markets were closed on Monday (June 17) in observance of Eid’l Adha or the Feast of Sacrifice.

“Unless we see positive developments on the outlook of our interest rates, the local market may only move sideways with bargain hunting providing the upside force. Downside risks including the less dovish outlook of the Federal Reserve and the sustained weakness of the peso may continue to weigh on market sentiment,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Last week’s four-day decline is seen to have opened the door for bargain hunting opportunities. However, the optimism needed for the market to rally is not yet seen. Investors are still waiting for positive catalysts, primarily one which would hint of monetary policy easing soon in the Philippines,” Mr. Tantiangco added.

The market could test the 6,400 level this week, he said.

“If it fails to get back above the said line, the market’s new trading range moving forward is seen from 6,150 to 6,400,” he added.

The Monetary Board will hold its next policy review on June 27.

The BSP will probably cut its policy rate after the US Federal Reserve, which has signaled it may start easing as late as December, the Finance chief said on Thursday.

Asked if the BSP would begin its easing cycle once the US central bank cuts rates, Mr. Recto said this was “highly probable.”

The Monetary Board has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023 following cumulative hikes worth 450 basis points (bps) to bring down inflation.

BSP Governor Eli M. Remolona, Jr. has said that the earliest the central bank can begin cutting rates is in August, with a total of 25-50 bps in easing likely this year.

Mr. Remolona earlier said the BSP does not need to wait for the Fed to begin its own easing cycle.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort put the PSEi’s major support at 6,360 and major resistance at 6,560-6,610.

Online brokerage 2TradeAsia.com said in a note that the market’s immediate support is at 6,200-6,250, while resistance is at 6,500.

“There could be a technical correction from [last] week’s low if and when the Fed shifts to a dovish tone given gathering weakness among several inflation-linked economic indicators, such as jobless claims and producer price index,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message. — R.M.D. Ochave with Reuters