Stocks to take cues from BSP, Fed policy meetings

STOCKS will move depending on the results of the Bangko Sentral ng Pilipinas (BSP)’ policy meeting this week, alongside announcements from the US Federal Reserve at its own review.

The 30-member Philippine Stock Exchange index ended last week on a positive note as it climbed 1.59% or 129.77 points to finish at 8,304.70.

Week on week, the benchmark index was up 2%.

All sectoral indices posted upticks last Friday, led by the industrials counter which added 3.5%, followed by holding firms which saw a 1.8% increase. Overall, advancers narrowly outpaced losers, 96 to 94.

“Before investors take on their Christmas break, key announcements from US Federal Open Market Committee (FOMC) and BSP’s policy meeting are among items slated this week,” according to a weekly market note by online stock brokerage 2TradeAsia.com.

The FOMC is expected to implement a 25-basis point rate hike at its two-day meeting set on Dec. 12-13. The Fed will also release economic projections, including US inflation figures.

Meanwhile, analysts said the Philippine central bank will likely hold on to current policy settings this week as inflation and liquidity conditions remain manageable, despite “building” pressure due to the expected Fed rate hike.

Twelve economists tapped in a ����ý poll late last week said the BSP Monetary Board will keep its policy stance unchanged at Thursday’s review, which follows the rate-setting meeting of the Fed.

Rates currently stand at 3.5% for the overnight lending rate, 3% for the overnight reverse repurchase rate, and 2.5% for the overnight deposit rate.

Analysts said current policy settings remain appropriate, with the growth momentum seen intact and with inflation easing from a three-year peak.

Commodity prices picked up by 3.3% in November, slowing from the 3.5% logged a month ago. This put the year-to-date average at 3.2%, matching the BSP’s forecast for the year.

Summit Securities, Inc. President Harry G. Liu said he sees no negative factors that may affect the market until yearend.

“If you look at it overall, so far we’re trailing 8,100 to 8,350 — that’s the window that we’re moving in. So far, I don’t see anything on site to be bearish on our market to yearend,” Mr. Liu said in a phone interview last week.

2TradeAsia.com also expects investors to take cues from listed firms’ announcements of their capital spending plans in 2018, which it noted should be balanced with benefits from the tax reform program and the awarding of infrastructure projects.

“Addressing the funding side is also crucial, and international players will also assess the administration’s ability to support tariffs to allow capital-intensive investors to recover investments and fulfill their mandates to shareholders,” the brokerage said. 

2TradeAsia.com noted the market will be trading with an immediate support level of 8,250, with resistance ranging from 8,400 to 8,450. — Arra B. Francia