PH traders expected to take cover ahead of Fed meet

All eyes will be on the US Federal Reserve’s policy meeting this week, with anxiety over the American central bank’s decision expected to spill over until Tuesday.

With all the vital economic indicators—easing inflation both in the Philippines and the United States—out, traders may try to sell some of their shares to limit their exposures, according to Stephen Oliveros, research associate at investment bank China Bank Capital Corp.

“The pick-up in selling pressure toward the close [last] Friday leads us to believe that investors may be reducing their exposures ahead of the Fed’s policy decision and release of their updated economic projections in the coming week,” Oliveros said in an email to the Inquirer.

The benchmark Philippine Stock Exchange Index (PSEi) managed to cling to the 7,000 level on Friday to close at 7,022.85, up by 1.25 percent week-on-week.

This is one of the bourse’s strongest performances in 19 months, having last closed above the 7,000 psychological resistance level on Feb. 3, 2023.

Easing inflation

The PSEi has so far climbed by 7.15 percent since the beginning of the year.

Analysts attributed this to easing inflation in the US, which could pave the way for an interest rate cut after four years. The Fed, whose move may be mirrored by the Bangko Sentral ng Pilipinas, is set to meet on Sept. 17 and Sept. 18.

“We may test the resistance at 7,150, depending on what [Fed] Chairman [Jerome] Powell says in the postmeeting comments,” said Alfred Benjamin Garcia, research head at stock brokerage house AP Securities Inc.

Garcia also noted that the market may remain cautious ahead of the meeting, resulting in tepid value turnover. —Meg J. Adonis INQ