Bearish trend seen for PSEi ahead of Fed decision
The Philippine Stock Exchange index (PSEi) closed last week at 6,061.81, down 0.47 percent, as foreign investors pulled P760.29 million from the market. Analysts expect continued pressure this week, driven by surging oil prices and a weakening peso. The peso hit a new low of P62.565 against the US dollar. Investors are awaiting the US Federal Reserve's policy decision, with futures markets pricing a 55 percent to 60 percent probability of a rate hike. This could further impact emerging markets.
The Philippine market faces significant headwinds. Oil prices above $100 per barrel will push September inflation higher than August's 6.1 percent, according to Philstocks. The peso's record low of P62.565 exacerbates this pressure, increasing import costs for the Philippines.
A hawkish US Federal Reserve decision this week would limit the Bangko Sentral ng Pilipinas' ability to ease monetary policy. Higher US yields make bonds more attractive than equities, diverting capital from the PSEi. The anticipated October listing of Mynt Inc., GCash's parent, offers a potential local catalyst, but its P92.3 billion IPO will test market appetite.
The immediate test for the PSEi is holding support at 6,000 this week. If the US Fed delivers an aggressive hawkish stance, sustained outflows from Philippine equities are likely. This would delay any significant market recovery.
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