Summit results, Fed meeting in focus

The stock market could go either way in a shortened trading week, analysts said, with investors expected to take their cues from an acrimonious G7 summit, the results of an upcoming meeting between the US and North Korean leaders and a widely-expected announcement of a fresh Fed rate hike.

The Philippine Stock Exchange index (PSEi), Timson Securities trader Jervin de Celis said, could either rise past 7,800 or fall below 7,500 with trading limited to today, Wednesday and Thursday.

Philippine markets will be closed on Tuesday (June 12) and Friday (June 15) in celebration of Independence Day and Eid al-Fitr, respectively.

The benchmark PSEi shed 0.80 percent or 62.57 points to close at 7,740.74 last Friday. The wider All Shares dipped 0.72 percent or 33.76 points to finish at 4,690.10.

US President Donald Trump capped a testy meeting of the world’s biggest economies during the weekend by refusing to endorse a joint statement, further adding fuel to a trade dispute with major allies such as G7 summit host Canada.

“The clash between … Trump and Canadian Prime Minister Justin Trudeau may also dampen market sentiment but for the Philippines, Canada is not a big trading partner if we compare it to our trades with China, so the rift might just affect market sentiment in the short run,” de Celis said.

An historic meeting between Trump and North Korean leader Kim Jong-un on Tuesday, meanwhile, will be widely watched by financial markets.

“If the [Trump-Kim summit] turns out favorable, that will buoy market sentiment for sure,” de Celis said.

The US central bank’s policymaking Federal Open Market Committee (FOMC) will also open a two-day meeting on Tuesday and is widely expected to hike benchmark rates, which may prompt investors to pull funds from emerging markets such as the Philippines.

“I think the solid catalyst that might push back our market above 8,000 is the second package of the tax reform where the corporate tax will be lowered but that will take some time, so I wouldn’t be surprised if our index consolidates … at [the]7,400 to 7,500 area,” de Celis said.

Luis Limlingan, managing director of Regina Capital Development Corp. said the shortened trading week could see sluggish trading.

“[From] the US, we will be taking our cues from the consumer price index, crude oil inventories, FOMC meeting announcement, jobless claims, retails sales, among many others. Locally, we will just be awaiting the latest overseas remittance data,” he said.

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