Investors look to Fed move for momentum

Investors look to Fed move for momentum

Investors will likely look for more clarity on the US central bank’s upcoming monetary policy statement this week after the local bourse rebounded despite faster inflation in the Philippines last month.

Trading platform 2TradeAsia.com said in an advisory over the weekend that analysts were expecting a rate cut by the US Federal Reserve this month, which could raise hopes of a similar move at home.

“Any outcome that is not this [rate] cut is likely to stymie rallies for the rest of the month,” 2TradeAsia added.

So far, the Bangko Sentral ng Pilipinas has slashed its benchmark rate by a total of 50 basis points to 6 percent. It has been hinting at another possible rate cut during its last meeting for the year to be held this month.

The benchmark Philippine Stock Exchange Index (PSEi) posted gains last week as it closed at 6,729 on Friday, up by 1.74 percent week-on-week.

According to 2TradeAsia, the bourse brushed off the uptick in domestic inflation, especially since it settled at the lower end of the government’s target range.

The Philippine Statistics Authority reported that November inflation accelerated to 2.5 percent from 2.3 percent in October as commodities absorbed the impact of typhoons.

At the same time, 2TradeAsia said the PSEi may not be as impacted as other markets by current global risks and uncertainties due to the Philippines being a domestic consumption-heavy country.

2TradeAsia sees the PSEi’s immediate support at 6,500 and resistance at 7,000 this week. —Meg J. Adonis INQ