Philippine Market Outlook Feb 8 2019

MARKET OUTLOOK

Stocks recovered on Thursday even as investors stayed on the sidelines ahead of the central bank’s first policy meeting of the year.

The index remained quiet for most of the day as the market awaited the central bank’s decision on its policy rate Thursday afternoon — with the consensus expecting rates to remain steady.

After the market’s close, the central bank announced it left key interest rates unchanged during its policy review on Thursday, keeping the overnight borrowing rate at 4.75%. The central bank earlier said that it would need more time to review its policy after inflation slowed faster than market expectations.

The January headline inflation print stood at 4.4% versus a market consensus of 4.5%.

The PSE continues to trade sideways ending the day either flat or up half a percent right at the 8,100 level. Second-liners are still in the spotlight as blue chips take a break.

The index got closed above 8,100 sooner than expected. From a technical standpoint, the market is extremely healthy and if any excitement brews, it just might shoot up to the next resistance at 8,200.

Meanwhile, worries that the United States and China would not be able to reach a trade deal could still intensify earlier concerns about slowing global economic growth.

President Donald Trump and Chinese President Xi Jinping were unlikely to meet by an early March deadline set by the two countries for reaching a deal, two U.S. administration officials and a source familiar with the negotiations said.

That news came after White House adviser Larry Kudlow said there was a "pretty sizable distance" between the countries, which are set to resume discussions in Beijing next week.

Any concern that the stalemate won't be overcome by China and the U.S. is going to create negative sentiment for the markets just because trade is the single largest overhang.

There's a resurfacing of global growth fears, and those issues will likely linger for some time.