Market may stay cautious before BSP decision

STOCKS may move sideways this week and retest the 6,400 mark as investors tread cautiously before the Bangko Sentral ng Pilipinas’ (BSP) policy meeting, where policymakers are widely expected to cut rates but give fresh signals about their monetary easing path.

On Friday, the bellwether Philippine Stock Exchange index (PSEi) sank by 1.33% or 86.67 points to end at 6,384.58, while the broader all shares index fell by 0.94% or 33.96 points to close at 3,560.26.

Week on week, the PSEi inched down by 6.33 points from its Feb. 6 finish of 6,390.91.

“Investors went on profit taking mode following the PSE’s rally mid-week ahead of key macro catalysts and Bangko Sentral ng Pilipinas’ policy meeting,” 2TradeAsia.com said in a market note.

“Cautious sentiment dominated the latter days of last week, causing the market to fail in holding its position at 6,400, and ultimately ending the week with a loss. Investors have taken profits while bracing themselves for upcoming leads,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

The PSEi started the previous trading week in the red but posted gains mid-week, even surging past the 6,500 mark on Wednesday and closing at a near seven-month high of 6,498.82, which traders said was largely supported by the peso’s strength against the US dollar. However, it closed lower as the week wound down on profit taking.

For this week, Mr. Tantiangco said the main trading driver is the BSP’s policy meeting on Thursday (Feb. 19). “Another policy rate cut by the BSP may spur positive sentiment in the market.”

All 16 analysts in a BusinessWorld poll expect the Monetary Board to deliver a sixth straight 25-basis-point (bp) cut at its first meeting for the year this week to bring the policy rate to 4.25%.

The BSP has lowered benchmark borrowing costs by a cumulative 200 bps since its easing cycle began in August 2024.

Mr. Tantiangco added that the release of companies’ financial results and remittances data could also provide leads to the market.

“Investors may also monitor the movement of the local currency, with a further appreciation expected to give the local market a boost.”

On Friday, the peso rose by 9.50 centavos to close at a four-month high of P58.020 versus the dollar from its P58.115 finish on Thursday.

However, Mr. Tantiangco said last week’s trading has shown some bearishness in the market as the PSEi again fell below the 6,400 resistance. He said the market will continue to test this level this week.

“If it is able to close above these lines, it may trade with a range of 6,400-6,550. If it fails to do so, however, its trading range is seen from 6,150 to 6,400,” he added.

For its part, 2TradeAsia.com placed the PSEi’s immediate support at 6,300, secondary support at 6,100, and resistance at 6,500. — Alexandria Grace C. Magno