SENTIMENT this week will be driven by monetary policy meetings both here and abroad, analysts said, with investors expected to be particularly looking for clues about the direction of key interest rates. The benchmark Philippine Stock Exchange index (PSEi), which has now fallen for two straight weeks, ended 0.17 percent lower week-on-week last Friday at 6,234.77. Philstocks Financial Inc. senior research analyst Japhet Tantiangco said this week’s focus would be on the US Federal Reserve’s policy meeting on December 12-13 and that of the Bangko Sentral ng Pilipinas (BSP) on December 14. Both central banks are expected to keep key interest rates unchanged and Tantiangco said investors would be particularly interested in the outlook for next year. “Hints of easing may spur optimism in the market while hints of further tightening are expected to weigh on sentiment,” he noted. Traders are also expected to be looking for other data that could brighten the economic outlook and boost the stock market, which remains at bargain levels with a price-to-earnings ratio of 13.46x. “Investors may also look towards our upcoming foreign trade, foreign investment, and OFW (overseas Filipino worker) cash remittances data for clues on our local economy,” Tantiangco said. Online brokerage said that hopes of steady interest rates, along with yields and futures that point to a nearly 50-percent chance of a BSP rate cut as early as May 2024, could also spur optimism. “All eyes are on the timing of the local easing cycle, especially as, unlike the Fed, the BSP has kept its inflation expectations less optimistic with a potential continuation up to 2024,” it added. For next year, growth and interest rate easing will be the driving themes, 2TradeAsia said, with “cooling global inflation [and] slower economic activity after having over a year of sharply higher capital costs.” Chart-wise, the stock market’s major support is expected to be at 6,000-6,150, while major resistance is seen at 6,400, analysts said.

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