Investor sentiment remains cautious heading into the week as markets brace for monetary policy decisions from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve, against a backdrop of escalating tensions in the Middle East.
“The week’s trades are likely to be risk-off as attention turns to the Israel-Iran conflict,” Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said.
“Prospects of rate cuts here could boost the market, but the US Fed is likely to stay on hold amid the noise,” Ravelas stressed.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said sentiment got a lift late last week following the announcement of a preliminary trade framework between the US and China, as well as the affirmation of the Philippines’ A- credit rating with a stable outlook by Japanese agency JCRA.
However, geopolitical and policy uncertainty still dominates, he said.
The PSEi closed Friday at 6,395.59, up 0.29 percent from the previous week’s close of 6,376.79. Despite the gain, the index remains 2.04 percent lower year-to-date, having ended 2024 at 6,528.79.
Foreign investors continued to exit the market, recording net selling worth P112.14 million last week.
Japhet Tantiangco of Philstocks Financial Inc. said attention this week will focus not just on policy rate moves but on forward guidance from the BSP and the Fed.
“Hints of easing from the BSP could lift sentiment,” he said, noting that the June 19 announcements will be closely watched, with the BSP set to release its decision ahead of the Fed.
Tantiangco warned that ongoing Middle East tensions could push oil prices higher, which in turn may derail the country’s fight against inflation — a potential market negative.
Still, he sees the local market as undervalued, trading at a price-to-earnings (P/E) ratio of 11.6x, below the five-year average of 17.3x and the regional average of 16.2x.
From 2TradeAsia.com’s perspective, investor attention will increasingly shift to developments in US-China trade negotiations, which are expected to firm up by July.
“Trade policy uncertainty compresses corporate planning cycles, elongates supply chain risk premiums, and reinforces caution in global capex,” it noted.
The online stock brokerage said the April plunge in the US trade deficit suggests companies are already pulling back on front-loading imports — a move that signals increasing sensitivity to supply disruptions.
“This makes third-quarter growth more vulnerable to even small shocks,” it added.
Emerging Asian markets, it warned, face challenges from renewed tariff volatility, with capital flows and allocations likely to favor strong balance sheets, sector stories, and liquidity over broad market trends.
“Until greater clarity emerges on the US-China trade path and the Fed’s response, markets will remain tactically fragile and event-driven,” 2TradeAsia.com said.
