Philippine stocks started the week in the red as investors await the outcome of the policy meetings of the US Federal Reserve and the Bangko Sentral ng Pilipinas.
The 30-company Philippine Stock Exchange index lost 6.28 points, or 0.10 percent, to close at 6,228.29, while the broader all-shares index dropped 1.93 points, or 0.06 percent, to settle at 3,327.65.
“Philippine shares closed slightly lower as markets braced for a new trading week,” Regina Capital Development Corp. head of sales Luis Limlingan said.
Analysts said while the Fed and the BSP are expected to maintain their policy rates, investors would look for cues on when rate cuts might happen in 2024.
Meanwhile, Asian markets diverged Monday as investors awaited key US data and a Federal Reserve policy decision after labor figures last week suggested the US central bank was on course to deliver a soft landing for the economy while reining in inflation.
A forecast-beating read on jobs on Friday — and a pick-up in consumer sentiment — tempered expectations for interest rate cuts in the new year but were not enough to jolt confidence that decision-makers have finished with their tightening cycle.
Readings on consumer prices and retail sales are due this week, as is the Fed’s meeting and boss Jerome Powell’s statement, which will be parsed for indications of officials’ plans.
Investors will also be keeping an eye on decisions by the European Central Bank and Bank of England this week.
“The run of data that preceded Friday’s non-farm payrolls data has mostly been softer, and equity markets appeared willing to overlook NFP as an outlier,” said IG Australia’s Tony Sycamore.
“However, the equity market is unlikely to be so forgiving if it gets another fright this week from either CPI, the (policy) meeting, or retail sales,” he said, referring to the consumer price index.
Stephen Innes at SPI Asset Management said the Fed was walking a fine line.
“On the one hand, there’s the concern that they might act too slowly to ease policy, leading to an economic downturn under the strain of higher interest rates, resulting in significant job losses for millions of people,” he wrote.
“On the other hand, there’s the fear of easing too early, which could result in inflation settling above three percent.”
He added: “Hopefully, by the week’s end, investors will have some clarity on the Federal Reserve 2024 playbook.”
All three main indexes on Wall Street rose Friday but Asian traders struggled to extend the rally, with sentiment jarred by figures showing China slipped further into deflation last month as leaders struggled to kickstart the stuttering economy.
Consumer prices fell at their steepest pace in three years, data showed, fueling fresh calls for the government to unveil more economic support measures.
“China’s deflation situation is deepening with the triple whammy from domestic food prices, international oil price corrections and weak domestic demand,” said economists at Citigroup.
“There is no time for policy hesitation to prevent a vicious loop between deflation, confidence and activities.”
Still, Shanghai chalked up gains, along with Tokyo, Sydney, Seoul, Taipei and Mumbai, but Hong Kong, Singapore, Wellington, Manila and Jakarta were in retreat.
London fell at the open, while Frankfurt was flat and Paris rose.
The yen fell more than one percent against the dollar on waning expectations the Bank of Japan will shift away from its ultra-loose monetary policy.
The Japanese unit surged to a four-month high in the middle of last week owing to bets on a move after governor Kazuo Ueda said handling monetary policy “will become even more challenging from the year-end and heading into next year”.
Talk had been building for an announcement after the BoJ’s meeting next week, but reports Monday said officials saw little need to change course just yet. With AFP