Share prices are expected to trade sideways this week as investors focus on developments overseas, particularly the upcoming United States Federal Reserve’s policy meeting and inflation rate release.
Local financial markets will be closed Monday to commemorate the country’s Independence Day.
Analysts said the US May inflation should drive market sentiments this week as this would provide a huge clue on the Fed’s next policy action.
Analysts said investors were anticipating the Fed to hold rates steady at its June 13 to 14 meeting if US headline inflation rate in May decelerated. This bolsters investors’ expectations that the Fed would likely pause interest rate hikes.
“A further rise in their policy rate is seen to weigh on the market, while a pause in tightening may boost sentiment. For cues on the Federal Reserve’s move, investors are also expected to watch out for the US’ upcoming May inflation report,” Philstocks Financial Inc. senior research analyst Japheth Tantiangco said.
The Fed has raised interest rates 10 times since last year to curb the stubbornly-high inflation.
Online brokerage firm 2TradeAsia.com said the continued easing of the Philippines’ own inflation rate and the Bangko Sentral ng Pilipinas’ recent move to cut the reserve requirement ratio were strengthening investors’ expectations that local interest rates would again remain unchanged.
“Both moves should provide tailwinds to macro fundamentals, as they wild help offset the impact of previous rate cuts,” 2TradeAsia.com said.
It said while local equities were trading sideways on a tight range, this could a prelude to a potential run-up.
The bellwether Philippine Stock Exchange index recorded its third week of losing streak amid tepid trading as many investors continued to stay on the sidelines.
The PSEi closed at 6,507 Friday, down 0.07 percent week-on-week.
Analysts said with the recent weekly declines, the market could see bargain-hunting this week, which could push the market higher.