Philippine Market Recap March 20, 2019

Market Recap

Philippine share prices recovered from previous days losses as investors positioned ahead of a policy decision by the U.S. Federal Reserve which is expected to shed more light on its interest rate plans for the rest of the year.

The benchmark PSEi gained 14.79 points or 0.19% to 7,858.20 at the closing bell. The broader All Shares added 14.20 points or 0.29% to 4,847.49.

Local equities still moved sideways amid the lack of fresh catalysts, persisting global trade disputes, slowing global economy and Brexit drama.

Some market players said selling was triggered by a report of U.S. concerns that China is pushing back against American demands in trade talks.

Still, on the whole, many market players held on to hopes of a trade deal between Washington and Beijing as officials from both sides remained locked in negotiations.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for another round of trade talks with Chinese Vice Premier Liu He, a Trump administration official said on Tuesday.

China is eager to come to an agreement. As long as both parties are holding meetings, many things will work out.

Confidence among listed companies remained low in Q1 as the U.S.-China trade dispute dragged on, pulling down a global economy that is already on a downward path.

Companies listed the global trade war as the top business risk, followed by higher interest rates and the slowing Chinese economy.

The Fed is widely expected keep rates steady later in the day, putting the main market focus on its policymakers’ rate projections for the next few years.

Since the beginning of year, Fed Chairman Jerome Powell has said the central bank would be patient - interpreted as code word for holding off on a rate hike - on signs of slowing economic growth in the United States and many parts of the world.

Financial markets have gone even further by pricing in a rate cut this year. Fed funds futures point to about a 30% chance of a cut by the end of year.

The Fed is also expected to lay out a plan to stop shrinking its $4-tril balance sheet, or so-called quantitative tightening. Many policy makers have suggested the Fed is likely to conclude the process and stabilize its bond holdings by the end of this year.

Prime Minister Theresa May is expected to ask the European Union to delay Brexit by at least three months after her plan to hold a third vote on her deal was thrown into disarray by a surprise intervention from the speaker of parliament.

May had earlier warned parliament that if it did not ratify her deal, she would ask to delay Brexit beyond June 30, a step that Brexit’s advocates fear would endanger the entire divorce.

On the other hand, the EU’s chief negotiator, Michel Barnier, has said an extension would only make sense if it increased the chances of May’s deal being ratified by Britain’s House of Commons.

Oil prices held close to four-month highs on expectations that OPEC would continue production cuts through the end of the year and after data from the American Petroleum Institute (API) showed a surprise draw-down on crude inventories.

More than 594.6-mil shares valued at 5.460-bil, changed hands. Market breadth was positive as advancers led decliners, 102 to 78, and 68 issues were unchanged.