Asian stocks slip amid rate cut speculations

MANILA, Philippines — Asian shares drifted lower yesterday in a week packed with a quintet of rich world central bank meetings and data on US inflation that could make or break market hopes for an early and rapid-fire round of rate cuts next year.

In the Philippines, stocks fell 6.48 points or 0.10 percent to close at 6,228.29. The sectoral gauges were mixed with most of the sectors finishing in the red.

Only the holding firms and property index finished in positive territory.

Total value turnover reached P4 billion. Market breadth was negative, with 118 losers outpacing 64 advancers while 48 issues were unchanged.

D.A. Market Securities said the PSEi fell as investors rebalance their portfolio and due to escalating tensions between China and the Philippines.

Regina Capital’s Luis Limlingan said investors would look at economic releases this week including the latest foreign direct investment figures and the Philippine central bank meeting on Dec. 14 and the latest cash remittances figure on Dec. 15.

An upbeat payrolls report has already seen investors scale back expectations for a March cut by the Federal Reserve, though May remains priced at a 76 percent chance.

The Fed is considered certain to hold rates at 5.25 to 5.50 percent this week, putting the focus on the so-called dot plots for rates and Chair Jerome Powell’s press conference.

The consumer price report for November on Tuesday will also influence the outlook, with analysts forecasting an unchanged headline rate and a 0.3 percent rise in the core.

The consumer price report for November will also influence the outlook, with analysts forecasting an unchanged headline rate and a 0.3 percent rise in the core.

“We look for another Fed-friendly CPI report but, barring surprises, anticipate the policy statement to signal that economic conditions have not changed enough for officials to drop their tightening bias just yet,” said John Briggs, global head of strategy at NatWest Markets.

“We think Powell will leave the option of a possible hike on the table, but the hurdle seems quite high for the Fed to follow through,” he said.

“We also expect the ECB to cut early while the BoE will continue to push-back against market pricing of cuts in the first half of 2024,” he added.