Looming Fed action weighs on local market

MANILA, Philippines — Investors are becoming wary of the looming US Fed decision on monetary policy, forcing them to exercise caution ahead of the policy-making meeting next week.

The benchmark Philippine Stock Exchange index (PSEi) declined yesterday,  shedding another 0.02 percent, or 1.36 points, to settle at 6,641.35.

Likewise, the broader All Shares index lost 0.07 percent, or 2.48 points, to close at 3,756.07.  as investors await the Fed to deliver a rate cut in its December 18 meeting.

Regina Capital head of sales Luis Limlingan said there is growing optimism that the Fed would loosen monetary policy next week. The Fed has room to cut its interest rates now that inflation is landing within the government’s projection.

A recent Reuters poll showed that economists believe the Fed will cut interest rates by 25 basis points and that the US monetary authorities may pause in  January. The pause should give way to the inauguration of president-elect Donald  Trump, who is pushing for inflationary policies, such as higher tariffs.

However, it remains to be seen how serious Trump is about pursuing his economic agenda in light of warnings from experts of its possible impact on Americans and the economy.

“Locally, investors exercised caution as the Fed will be deciding next week on its interest policy following the US inflation release,” Limlingan said.

Throughout yesterday’s trading, the PSEi saw P6.18 billion worth of shares change hands, with losers outnumbering the winners, 96 to 82, while 70 issues were unmoved.