Philippine stocks are projected to continue their sideways movement this week, with investor attention focused on critical policy meetings of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).
On Thursday, the Philippine Stock Exchange index (PSEi) fell by 0.52%, closing at 5,910.06. The broader all shares index also dropped, down 0.44% to 3,289.95.
The PSEi has decreased by 28.32 points compared to last week, when it closed at 5,938.38.
Geopolitical Tensions Impacting Market Sentiment
Market analysts attribute the recent decline to escalating tensions in the Middle East, particularly following US military strikes against Iran. As a result, the Strait of Hormuz has been closed, raising concerns over potential increases in global oil prices.
The local market extended its decline as tensions in the Middle East continue to escalate. This comes as the US strikes Iran as the two remain without a deal. Iran as a response completely closed the Strait of Hormuz again posing upside risks to global oil prices.
Japhet Louis O. Tantiangco, Research Manager, Philstocks Financial, Inc.
Looking ahead, F. Yap Securities, Inc. notes that market movements will largely depend on the outcomes of the Fed and BSP meetings, scheduled for June 16-17 and June 18, respectively.
Analysts anticipate that the Federal Reserve will maintain current interest rates, especially under the leadership of new chair Kevin M. Warsh. A Reuters poll suggests that most economists expect rates to remain steady for the remainder of the year.
In contrast, a *BusinessWorld* poll indicates that 19 out of 20 analysts foresee a second consecutive rate hike by the BSP, with 15 expecting a 25-basis-point increase and four predicting a more aggressive 50-basis-point hike.
F. Yap Securities warns that aggressive rate hikes could signal monetary panic and disrupt fragile local credit channels. They recommend a conservative approach until after the policy decisions are announced.
The PSEi's support is seen at the 5,750-5,800 range unless unexpected developments arise from either the BSP or the Fed.