Stocks to trade sideways ahead of BSP meeting

MANILA, Philippines — The stock market is expected to trade sideways while investors await the results of the Bangko Sentral ng Pilipinas (BSP) monetary board meeting later this week.

Weighed down by April inflation and first quarter economic performance, the Philippine Stock Exchange index (PSEi) closed in the red last week as it finished at 6,511.93, down by 1.57 percent week-on-week.

Inflation in April hit 3.8 percent, faster than the 3.7 percent in March this year but lower than the 6.6 percent recorded a year ago.

The Philippines’ gross domestic product (GDP) grew by 5.7 percent in the first quarter of 2024, the Philippine Statistics Authority said last week.

The first quarter performance was higher than the 5.5 percent clip seen in the fourth quarter of 2023, but lower than the 6.4 percent growth recorded a year ago.

In a report, 2TradeAsia.com said the BSP is expected to keep rates steady this week.

However, it said stubborn inflation figures in April are making the speculation more interesting, especially in light of newly announced disappointing first quarter GDP.

2TradeAsia.com said the probability of a rate cut by June as initially communicated by the BSP is gradually evaporating in light of high US inflation plus the Fed moving rate cuts further into the year.

A local policy rate-setting meeting is set on Thursday, May 16.

“Our then conservative outlook that rates may not move until late into the year is being supported by new data points, which puts pressure on growth and alpha plays in equities,” 2TradeAsia.com said.

“Range trading is reiterated while the index seeks stronger identity above the 6,500 zone,” it added.

Support is seen at 6,400, while resistance is at 6,700 to 6,800.