PSEi enters precarious stage as investors await key rate decisions

MANILA  -With the local benchmark index hitting its lowest level for the year after falling below a key support zone, investors will be bracing for other factors that could impact trade, including the policy meeting results here and in the United States.

The Philippine Stock Exchange index (PSEi) shed 1.5 percent the past week to end at 6,126.34. The close below support increases the risk the measure could retest lower levels of 6,000 or below.

The major news driver this week is the Sept. 20 policy meeting by the powerful US Federal Reserve. Observers, however, are expecting the Fed to keep the key interest rate on hold.

“[There is a] possible Fed rate pause as signaled by Fed chair Jerome Powell during the Jackson Hole symposium and by the markets (from the current 5.25 percent to 5.50 percent target range, the highest in 22 years or since 2001),” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

The Bangko Sentral ng Pilipinas, meanwhile, will announce the results of its own interest rate-setting meeting on Sept. 21.

Ricafort said the Philippines could match the US Fed “in order to maintain healthy interest rate differentials to support stability of the peso exchange rate, import prices, and overall inflation; [a] pause in local policy rates [is] also a possibility, especially if the peso exchange rate is relatively stable.”

He pegged the next PSEi support area at 6,040 and the immediate resistance levels at 6,420 to 6,480. INQ