PHILIPPINE SHARES may continue to rise this week amid positive market sentiment following the US Federal Reserve’s decision to begin its rate-cutting cycle.
On Friday, the bellwether Philippine Stock Exchange (PSEi) index rose 0.69% or 50.16 points to end at 7,252.32, while the broader index of all shares rose 0.61% or 23.94 points to close at 3,895.62.
Friday’s close was the best finish for the PSEi in more than two years or as it ended at 7,288.07 on March 7, 2022.
On a weekly basis, the benchmark index rose 3.27% or 229.47 points from its close of 7,022.85 on September 13, rising for the third week in a row.
“The Fed has officially started its rate-cutting cycle with higher rate cuts, sending global markets into a buying spree,” the online brokerage firm said. 2TradeAsia.com said in the market book.
“The local market has been showing bullish momentum, rising for three straight weeks, with the last one surpassing the 7,150 resistance level,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.
The Fed last week cut its policy rate by 50 basis points (bps) to 4.75%-5%, marking its first easing move since March 2020.
Interest rate futures contracts now price around a 30% chance that the Fed will deliver a second cut of the same size in November, Reuters reported. Market-based odds of a quarterly rate cut in November are now around 70%, up from around 65% ahead of the data.
This week, Mr. Tantiangco said the Philippine stock market could extend its rally, although profit-taking may be possible.
“The market may end this week on a positive note as the monetary policy outlook of the Bangko Sentral ng Pilipinas (BSP) and the Fed may continue to raise optimism,” he said.
He placed PSEi support at 7,150 and resistance at 7,400.
Analysts said the start of the Fed’s easing cycle gives the BSP more room to cut its interest rates.
Board of Revenue on Aug. 15 cut its policy rate by 25 bps to 6.25% from a more than 17-year high of 6.5%. BSP Governor Eli M. Remolona, ​​Jr. he said the central bank may deliver another 25-bp rate cut in the fourth quarter. The remaining meetings of the Board of Finance this year are scheduled for Oct. 17 and Dec. 19.
For its part, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort placed immediate market support at 7,000 and resistance at 7,338.66-7,552.20.
“Most of the weak US economic data recently could raise the odds of a Fed rate cut in the coming months that could be matched locally,” said Mr. Ricafort e-mail.
2TradeAsia.com placed PSEi immediate support at 7,100 and resistance at 7,500. “The local currency has successfully reached the 7,200 level for the first time since 2022, this time supported by a clear path towards lower rates until 2026, reduced inflation, and forward-looking valuations.” – RMD Ochave with Reuters
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