Stocks may rise before Powell speech, BSP meet

Philippine shares may rise slightly when the market reopens on Friday as investors reposition before the US Federal Reserve Chair Jerome H. Powell’s speech at their annual gathering and the Bangko Sentral ng Pilipinas’ (BSP) policy meeting next week, where it is expected to deliver a third straight rate cut.

On Wednesday, the Philippine Stock Exchange index (PSEi) inched up by 0.20 point to close at 6,277.87, while the broader all shares index slipped by 0.07% or 2.76 points to end at 3,735.14. The market was closed on Thursday for the Ninoy Aquino Day holiday.

“There can be muted technical correction ahead of next week due to an oversold market,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.

The PSEi has been moving sideways in the past few days, staying at the 6,200 level due to a lack of fresh catalysts before the US Federal Reserve’s annual Jackson Hole symposium.

Mr. Powell is scheduled to make a speech at the gathering on Friday, which markets will monitor for potential hints of the direction of monetary policy in the world’s largest economy amid expectations of a Fed cut next month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Fed has kept its target rate at the 4.25%-4.5% range since December 2024.

Traders ramped up bets for a September cut following a surprisingly weak payrolls report at the start of this month, and were further encouraged after consumer price data showed limited upward pressure from tariffs, Reuters reported. However, a hotter-than-expected producer price reading last week complicated the policy picture.

Minutes out overnight from the Fed’s July gathering, when policymakers voted to keep rates steady, suggested that Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller were alone in pushing for a rate cut.

That led traders to pare back odds to 80% for a quarter-point Fed rate cut on Sept. 17, down from 84% 24 hours earlier. They are currently pricing in a total of 53 basis points of easing over the rest of the year.

Another key catalyst for the market is the BSP’s Aug. 28 policy meeting, where the market expects a third straight 25-basis-point reduction, Mr. Ricafort said.

This would “lower borrowing costs that would help spur more demand for credit and, in turn, spur more economic activities and overall GDP (gross domestic product) growth,” he added.

Mr. Ricafort placed the PSEi’s immediate support at 6,204.04 and immediate major resistance at 6,370.

BSP Governor Eli M. Remolona, Jr. said last week that a rate cut is “quite likely” at the Monetary Board’s meeting next week.

Mr. Remolona added that they could lower benchmark rates by only two more times for the remainder of the year, including the possible move on Aug. 28, as they expect inflation to stay within the 2-4% target. — R.M.D. Ochave with Reuters