Market to remain volatile

MANILA, Philippines — Volatility is expected to prevail in the local market this week, with investors keeping an eye on the results of the Bangko Sentral ng Pilipinas (BSP)’s upcoming policy meeting.

Despite ending last week in positive territory at 6,238.46, the benchmark Philippine Stock Exchange index fell by 0.93 percent week-on-week.

Philstocks Financial research manager Japhet Tantiangco said worries over the situation in the Middle East took center stage again as the US-Iran ceasefire ended without a deal or an extension agreement.

He said this caused the local bourse to pull back, even breaching the 6,150 support line intra-week.

This week, Tantiangco said a choppy market may be seen as it weighs lingering uncertainties against the first half corporate season.

“With no end in sight, tensions between the US and Iran are expected to remain hanging above market sentiment. Especially as global oil prices continue their climb, in turn, setting up higher inflation expectations at home,” Tantiangco said.

The BSP, meanwhile, will have its policy meeting this week.

Tantiangco said the BSP is seen to be at a critical juncture as it balances elevated inflation against slowing economic growth in its policy decision.

He said the uncertainties in policy direction may weigh on the market.

2TradeAsia.com, for its part, said local monetary authorities might keep its policy rate steady for the Aug. 27 meeting, as assessments are weighed between inflation trend and second half economic growth.

It said that combined with the peso trading near 61.50 to 61.80 and ongoing food-supply volatility, the room for early rate cuts looks extremely limited for now.

“Monitor possible intervention to cap further weakness in case a rate hold is upheld,” 2TradeAsia.com said.

The local market is expected  to trade within the 6,150 to 6,400 range.