Stocks await BSP, Fed action

MANILA, Philippines — Range-bound trading is seen in the local market this week as investors wait for key policy decisions from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

The Philippine Stock Exchange index (PSEi) capped off last week’s shortened trading week in the red at 5,910.06, down by 0.48 percent week-on-week amid inflation concerns and renewed US-Iran military hostilities.

First Metro Investment Corp. head of research Cristina Ulang said the market could be on recovery mode this week due to a reported US-Iran peace deal, falling oil prices and positive Wall Street backdrop on blockbuster SpaceX initial public offering.

Online portal 2TradeAsia.com, meanwhile, sees the market’s next direction hinging on two policy calls – the BSP on June 18 and the US Federal Reserve on June 16 to 17.

The F. Yap Securities Inc. unit said consensus points to 25-basis point hike from BSP to rein in inflation, while the Fed is expected to hold.

“Until both decisions land, treat the tape as range-bound and let the outcomes set the trend before taking on aggressive position,” it said.

It added that it is favoring strict cautious stance and modest position sizing heading into these dual central bank meetings.

It said low visibility policy road ahead with the US-Iran war still humming in the background means easing off on the gas pedal.

“A no-frills 25-bps BSP cut plus a steady Fed message is preferred to support base-building towards 6,000,” 2TradeAsia.com said.

“With support on the PSEi still near the 5,750 to 5,800 zone, a clean break (e.g., Fed +25bps, BSP +50bps) would open the door to further testing of last year’s lows,” it said.