PSEi hardly changed as investors await results of Fed meeting

The local stock barometer ended flat Wednesday as investors across the region chose to be cautious ahead of the outcome of the US Federal Reserve’s latest policy setting.

The Philippine Stock Exchange index (PSEi) shed 2.21 points or 0.03 percent to close at 7,227.45. Across the region, investors awaited the outcome of the US Federal Reserve Open Market Committee (FOMC) meeting.

Citigroup said in a research note Wednesday that markets would await a signal from the FOMC meeting about the likely path of “policy normalization.” While the market does not expect a tightening in interest rates in this meeting, investors are closely monitoring the FOMC’s tone.

“We have noted before that investors tend to start worrying about a US rate hike about five to six weeks before the quarterly FOMC meetings that have press conferences,” Citi said. “Despite the soft ECI (employment cost index) data overnight, expectations for further evidence of labor market tightness and wage inflation likely remain entrenched. Thus, any hawkish shift in the statement tonight could trigger a repricing, not only of the probability of a March hike but potentially also of the start of the Fed’s balance sheet unwind.”

BofA Merrill Lynch expects the FOMC to “sound modestly more hawkish, noting the decline in labor utilization and improvement in confidence.” It does not expect any change in interest rates or the reinvestment policy for now.

At the local market, the day’s decline was led by the financial, services and property counters while the industrial, holding firms and mining/oil counters firmed up.

Foreign investors were net sellers amounting to P567 million.

Value turnover amounted to P5.11 billion. There were 96 advancers that edged out 83 decliners while 54 stocks were unchanged.