Philippine stocks are expected to move sideways with an upward bias this week as investors await the outcome of the US Federal Reserve policy meeting.
Analysts expect the index to stay above the 7,000 level if the Fed proceeds with a 25-basis-point (bps) rate cut.
“Traders are pricing in a 25-bps rate initial rate cut, with a possibility of another 25 bps in December,” online brokerage firm 2TradeAsia.com said.
The Philippine Stock Exchange index breached the 7,000 psychological level amid improving macroeconomic condition and investor confidence for the second half of the year.
“With macro and corporate data moving positively along a similar director, volumes should be aided by institutional funds edging back into risk after consecutive quarters of being harrumphed by either tight capital environment or limited growth play option,” 2TradeAsia.com said.
Philstocks Financial Inc. research head Japhet Tantiangco said the market might test the strength of 7,000 level as trading volume was lukewarm.
“A policy rate cut by the Fed together with hints of further easing moving forward is expected to fuel optimism at the local front since this would give the Bangko Sentral ng Pilipinas more room to ease their policy too,” Tantiangco said.
Tantiangco said the continued strengthening of the peso against the dollar is also helping boost the domestic equities market.
The index is seen to trade between 7,000 and 7,100 this week.
The PSEi closed at 7,022.75 last week, up 1.25 percent week-on-week, while the all-shares index ended at 3,788.62, higher by 0.95 percent.
Average daily turnover improved to P6.6 billion as foreign investors were net buyers by P2.66 billion.
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