Fed meeting, Maynilad IPO seen influencing share prices

THE stock market could remain under pressure this week as investors await the results of a US Federal Reserve policy meeting while also preparing for the country’s biggest initial public offering (IPO) this year, analysts said.

The benchmark Philippine Stock Exchange index (PSEi) closed Friday at 5,988.02, down 1.67 percent from the previous week, a result DragonFi Securities Inc. research analyst could be due in part to investors “trimming their current holdings to raise cash” ahead of Maynilad Water Services Inc.’s public debut.

The offer period for West Zone concessionaire’s P34-billion IPO started last Thursday and is scheduled to end until Oct. 29. On Friday, Maynilad said that it was exercising an upsize option given strong investor demand.

“The index may face additional downward pressure as investors trim positions to free up funds for the upcoming Maynilad IPO,” Tin said, adding that “this weakness could persist throughout the IPO offer period.”

Tin said that market participants were also awaiting the release of third-quarter corporate earnings results, which could provide a clearer direction for the rest of the year.

“A broad-based earnings beat among index constituents could provide the impetus for a medium-term recovery in the PSEi,” he said.

Online stock brokerage firm 2TradeAsia.com, meanwhile, said monetary policy signals were likely to shape market movements this week.

“Messaging from Fed officials remains divided amid sticky inflation and softening jobs data, a situation that amplifies global uncertainties, particularly in emerging markets,” it noted even as a rate cut “now stands as the clear baseline” for the Oct. 28-29 Federal Open Market Committee meeting.

A follow-up move in December could extend the easing cycle into early 2026 if inflation data remains favorable, 2TradeAsia added.

Locally, the online brokerage said “benign inflation” could pave the way for another 25-basis-point rate cut by the Bangko Sentral ng Pilipinas in December, which may bolster consumer spending and capital investment.

It added that global disinflation and dovish central bank policy could embolden risk appetite in emerging markets, attracting capital toward Philippine equities.

Still, 2TradeAsia said investors should remain cautious amid short-term global and domestic headwinds, noting near-term risks from an upcoming meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping, and an ongoing US government shutdown.

“Absent key catalysts, the base case is for the PSEi to hold firm above 6,000 through November, buoyed by resilient remittances and holiday retail upticks,” 2TradeAsia said.

It added that a “Santa Claus rally” could still materialize if inflation trends remained favorable and foreign inflows returned.