BSP rate cut hopes may support PHL shares’ rise
PHILIPPINE STOCKS could sustain their uptrend when trading resumes on Thursday as the Bangko Sentral ng Pilipinas (BSP) is widely expected to deliver a rate cut and with markets still hoping for tariff negotiations between the United States and its trading partners.
On Tuesday, the bellwether Philippine Stock Exchange index (PSEi) climbed by 3.15% or 183.49 points to close at 6,006.34, while the broader all shares index increased by 2.46% or 86.03 points to 3,582.80.
The market was closed on Wednesday, April 9, for the Day of Valor holiday.
Bargain hunting helped the Philippine market rebound from Monday’s rout that saw the PSEi plummet to 5,822.85, which was its worst finish in over two-and-a-half years or since it closed at 5,783.15 on Oct. 3, 2022. The bloodbath was due to trade war fears stemming from the US’ move to impose sweeping tariffs on its trading partners.
US President Donald J. Trump’s “reciprocal” tariffs on dozens of countries took effect on Wednesday, including massive 104% duties on Chinese goods, deepening his global trade war and spurring more widespread selling across financial markets, Reuters reported.
Mr. Trump’s punishing tariffs have shaken a global trading order that has persisted for decades, raised fears of recession and wiped trillions of dollars off the market value of major firms.
Mr. Trump has shrugged off the market rout and offered investors mixed signals about whether the tariffs will remain in the long term, describing them as “permanent” but also boasting that they are pressuring other leaders to ask for negotiations.
First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message that Philippine stocks may continue to rise on Thursday in a technical rebound “as the market cheered Trump’s hinting of flexibility on reciprocal tariffs.”
Meanwhile, the BSP’s policy meeting will also be a key trading driver, with prospects of further monetary easing expected to boost sentiment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The possible 25-basis-point (bp) local policy rate cut at the next BSP rate-setting meeting on April 10 and total possible local rate cuts of 50 bps or 75 bps for 2025, as signaled by local monetary officials recently, would be an offsetting positive factor,” Mr. Ricafort said. He put the PSEi’s support at 5,820 and immediate resistance at 5,901-6,053.
A BusinessWorld poll last week showed that all 17 analysts surveyed expect the Monetary Board to slash its target reverse repurchase rate by 25 bps to 5.5% from the current 5.75% at its policy meeting on April 10 (Thursday).
The Monetary Board has brought down borrowing costs by a cumulative 75 bps since it began its easing cycle in August last year.
BSP Governor Eli M. Remolona, Jr. has said that they could cut rates by up to 75 bps this year to support the economy. — R.M.D. Ochave with Reuters
