Inflation, BSP decision next in investors’ sights

THE stock market could remain rangebound this week absent significant catalysts, analysts said, with investor attention seen shifting to March inflation data due April 4 and the Bangko Sentral ng Pilipinas' April 10 policy meeting.

Domestic data releases that could influence the market — February trade figures and the BSP's latest consumer and business expectations survey — will come at the end of trading week and investors are also expected to be waiting for developments in the trade war launched by US President Donald Trump, specifically reciprocal tariffs against all trading partners set for April 2.

Wall Street's having closed higher on Friday after Trump said there would be “flexibility” in his plans could also provide some lift.

The benchmark Philippine Stock Exchange index (PSEi), which fluctuated between the upper 6,200 level and the low 6,300s, closed Friday at 6,266.75, down 0.43 percent week-on-week and 4.01 percent lower since the start of the year.

“In our view, the index may still range between 6,000 and 6,300 [this week],” Unicapital Group research head Wendy Estacio-Cruz said, adding that she expects the BSP to again keep interest rates unchanged next month.

The US Federal Reserve last week also kept rates steady for a second straight policy meeting, citing inflationary and growth uncertainties as Trump pursues his protectionist policies.

The US central bank, however, also maintained its outlook of 50 basis points in rate cuts this year. The pace by which its balance sheet will be reduced will be slowed, it added.

Online stock brokerage 2TradeAsia.com said “these events are not unexpected given the more complex factors into the inflation model since the installment of Trump last January.”

“Interestingly, President Trump sub-tweeted at the Fed calling for more aggressive dovish action via new tariffs in effect by April,” it noted.

2TradeAsia does not expect the Fed to soon change its stance, with the rate cuts likely to happen in the second half of 2025.

“Expect volatility in this space to be the new baseline as growth concerns now spillover to politico-economic rhetoric, at least in the US,” it added.

2TradeAsia also noted that the BSP's latest Monetary Policy Report had forecast domestic growth to be at the lower end of the government's 6.0- to 8.0-percent target. While “above average regionally … it does signal some form of reality check amid heightened uncertainties,” it added.

It warned against preemptive pricing for an April rate cut, saying that “interim data can still alter the BSP's stance, [and] an early cut will put parity pressure on the peso.”

2TradeAsia said that “increased risk management is key as the market approaches mid-year, knowing rate cuts are mostly back loaded into [the second half of 2025].”

“Interest rate policy decisions here and abroad are to take center stage and growth concerns come to the forefront amid elevated politico-economic risk,” it added.

“Focus on fundamentals; resilient firms outpace macro noise,” 2TradeAsia continued.