The Bangko Sentral ng Pilipinas’ (BSP) policy meeting and company earnings are seen set to drive the market’s direction this week, though within a trading range of 500 points.
“Main focus, however, is expected to be the Bangko Sentral ng Pilipinas’ policy meeting, where investors will watch out for the monetary authority’s policy decision and outlook. A cut in policy rates together with a dovish outlook is expected to give the market a boost,” Japhet Tantiangco, analyst at Philstocks Financial Inc., said.
While the bellwether PSEi dropped 86.98
points to 6,154.99 at the close of trading on Friday, it was up by 4.98 percent from 5,862.59 a week earlier.
The market actually bounced back past the 6,000 and 6,150 crucial lines, as well as the PSEi’s 10-day exponential moving average, Tantiangco said.
Jonathan Ravelas, managing director at eManagement for Business and Marketing Services (EMBM), however said the profit-taking that downed the PSEi on Friday “clearly supports that the rally from the 5,862.59 low is a mere technical bounce.”
The market will range within the 500 bandwidth between 5,800- 6,300, while getting additional cues from US President Donald Trump’s trade tariffs, Ravelas added.
Lender Metropolitan Bank and Trust Co. (Metrobank) said that markets now widely expect a 25 bps cut on policy rates to 5.50 percent.
The focus now turns to hints on how further can officials go with the monetary easing cycle, said Marian Monette Florendo and Yoshitaka Hirakawa, research officers at Metrobank.
The moderate economic growth over the last two years as well as the current inflation outlook “may provide the BSP with the urgency to continue with its easing cycle,” Metrobank’s research officers said.
“Although policy rates remain at elevated levelS, and the BSP is expected to continue easing monetary conditions, recent sentiments from (Bangko Sentral Governor Eli) Remolona signal a moderation in the pace of future reductions,” they said.
“As the February 13 MB (Monetary Board) meeting approaches, the BSP governor confirmed that a rate cut is ‘still on the table’. Metrobank shares this view. We expect the BSP to deliver a 25 bp cut, narrowing the interest rate differential with the US policy to 100 bps,” they added.
Online stockbroker 2tradeasia.com is focusing on company earnings as well.
Post the shuffle in the PSEi and its constituents, expect trades that may be more reflective of earnings releases and the gyrating headlines about the US trade policies., but seasoned traders will likely stay glued to potential moves from the BSP to snap prime positions in key bargain plays, it added.