PHILIPPINE STOCKS could continue to rise this week after the Bangko Sentral ng Pilipinas (BSP) cut benchmark interest rates for the first time in almost four years on Thursday.
On Friday, the Philippine Stock Exchange index (PSEi) rose 2.3% or 154.46 points to end at 6,847.37, while the broader all-stock index rose 1.74% or 63.27 points to end at 3,691.42.
Week on week, the PSEi rose 3% or 199.57 points from the close of 6,647.80 on August 9, marking its second consecutive weekly gain.
“Local stocks rose, boosted by the Bangko Sentral ng Pilipinas’ 25 basis points (bp) rate cut, the first in nearly four years,” said online brokerage firm 2TradeAsia.com said in a market note.
“The local market performed well last week, with value turnover above this year’s average. In doing so, the market managed to move past its resistance range of 6,700-6,800,” said Senior Research Analyst Japhet Louis O. Tantiangco of Philstocks Financial, Inc. in a Viber message.
The Monetary Board cut its target reverse repurchase rate by 25 basis points to 6.25% on Thursday.
This was the first time the BSP cut rates since November 2020, when it implemented a 25 basis point rate cut during the coronavirus pandemic.
Before the cut, the BSP kept its policy rate at a more than 17-year high of 6.5% for six consecutive meetings, following cumulative hikes worth 450 basis points between May 2022 and October 2023 to combat inflation.
“With inflation on the targeted consistent path, the current macroeconomic outlook supports a calibrated shift toward a less restrictive monetary policy,” BSP Governor Eli M. Remolona Jr. said at a briefing.
Mr Remolona said they could cut rates by another 25 basis points this year. The remaining policy-setting meetings of the Monetary Board are scheduled for October 17 and December 19.
This week, the market will continue to react to the BSP’s rate decision, Mr. Tantiangco said.
“With the BSP already delivering a 25 basis point rate cut, along with the prospect of further monetary policy easing, we may see the market rise further this week,” he said. “Easing concerns about the recession in the United States are also expected to help the local stock market.”
Mr Tantiangco said if the PSEi can hold at the 6,700-6,800 range, this would be the new support, while the next resistance is at 7,000.
“There is a clear upward trend in market movements as interest rate cuts, both locally and abroad, have turned in favor of risky assets. The extinction of the ‘higher-for-longer’ view of global interest rates could be the boost the PSEi needs to approach 7,000 in the medium term.” 2TradeAsia.com said.
The online brokerage placed the market’s immediate support at 6,600 and resistance at 7,000.
Philippine financial markets will be closed on Friday, August 23, due to a special non-working holiday in honor of Ninoy Aquino Day, which was moved from its original date of August 21. — RMD Ochaaf