Shares to edge sideways as focus turns to BSP

STOCKS will likely continue moving sideways this week, with investors expected to watch out for the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on Thursday amid the lack of stronger leads.

The Philippine Stock Exchange index ( PSEi) closed at 7,882.22 last Friday, down 1.03% or 82.27 points from the previous session.

Week on week, the bellwether index gave up 108 points or 1.35% from June 9’s finish of 7,990.24 as investors stayed cautious ahead of the outcome of the US Federal Reserve’s policy-setting Federal Open Market Committee (FOMC) meeting, analysts said.

“Caution reverberated throughout the week’s sessions, ahead of results from the US FOMC meeting,” said 2TradeAsia.com.

Some sectors were in “red territory” as the index moved within a range of 7,882 to 7,995, it added.

The wider all-shares index lost 0.68% to 4,695.15. Decliners outnumbered advancers at 111 to 85, while 50 finished unchanged.

“Last week, in a surprising turn of events, not only did the PSEi fail to break its psychological limit yet again, it also undone all the aggressive trading in the morning session, which saw the index breach the 8,008 weekly resistance,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said.

This week, investors will look to the BSP policy meeting on Thursday, which comes after the US Federal Reserve’s move to raise interest rates anew last week.

Ten of 11 analysts in a BusinessWorld poll expect the central bank to stand pat on its policy stance during its review.

The policy meeting, the final one for BSP Governor Amando M. Tetangco, Jr. before he ends his 12year term next month, is awaited after the Fed move and the Bank of Japan’s decision to keep rates steady, said 2TradeAsia.com.

Mr. Tetangco said last week that the BSP would “not necessarily” have to match the Fed’s moves, saying that domestic conditions are of bigger concern rather than external developments in setting the benchmark borrowing rates here.

2TradeAsia.com said “consensus point towards an unchanged rate as May’s inflation settled lower at 3.1%. The same might prevail towards early [third quarter], with crude futures trailing at the low end.”

“Moving forward, BSP is seen to raise benchmark rates by at least 25bps before the year ends,” it said, to keep pace with benchmark securities and expectations of improved demand in the second half that may support higher pricing. It said gauges “needed to stabilize for now, to support rises to higher terrain. Immediate support is 7,800, resistance 8,000-8,050.”

“Locally, everyone will be turning their attention to the BSP meeting as bets are being raised as to one when we will raise our own interest rates in response to many central banks last week coming up with their own policy statements last week,” Regina Capital’s Mr. Limlingan said.