Global and Philippine Market Update

Feb. 22  to Feb. 28, 2024

Global Markets 

Global Stocks resilient, continued their upward trend in the face of negative data.  

• US consumer confidence dipped in February following three consecutive monthly increases. While consumers are less worried about food and gas prices, concerns have shifted toward the labor market and the current political environment. Despite the challenges, the US economy remains robust, but high-interest rates are causing housing affordability to negatively impact consumer sentiment. However, the economy is still expected to remain stable on its path to the Federal Reserve’s (Fed) 2% inflation target.

• UK grocery prices experienced a notable decline, reaching their lowest annual rate since March 2022 at 5.3% in the four weeks leading to February 18. This marks a 1.5% decrease compared to the preceding four weeks. Additionally, data from the British Retail Consortium indicated that overall prices in UK shops rose at the slowest pace in two years, contributing to signs of alleviating inflationary pressures.

• Jamie Dimon, CEO of JPMorgan Chase, expressed belief that market expectations for a soft landing of the US economy might be too optimistic. He sees a 50% chance of avoiding a recession, in contrast to the 70 to 80% odds currently priced in by investors. While he does not anticipate a repetition of severed downturns like the 2008 financial crisis, he acknowledges that higher interest rates, coupled with a recession, could have localized impacts on areas such as commercial real estate and regional banks. 

Philippine Stocks  

Philippine Stocks consolidated as they attempted to break higher.

• Moody’s Analytics has increased its growth forecast for the Philippines to 5.8%, up from the previous estimate of 5.4% in January. This positions the Philippines as the third-fastest-growing economy in the region, trailing behind India and Vietnam at 6%. The country’s resilience is attributed to electronics exports, robust domestic demand, government spending and remittances.

• The National Economic and Development Authority (NEDA) included 23 new projects in the infrastructure project list (IFP) while removing 36 projects, emphasizing the government's focus on prioritizing and expediting the implementation of critical infrastructure initiatives. NEDA Secretary Arsenio M. Balisacan highlighted the continuous monitoring, review, and updating of the IFP list to prioritize significant projects. These projects encompass various sectors such as transportation, energy, water resource, and social infrastructure.

Philippine Bonds  

Philippine Bond yields stayed elevated amid delays in  central bank rate cuts. 

• The government successfully raised Php 584.86 billion from its recent five-year retail Treasury bond (RTB) offering, surpassing the Php 400 billion target. The 6.25% coupon rate exceeded the 6.125% rate quoted for the five-and-a-half-year RTB offered in February last year. Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted the lower amount raised compared to the Php 700 billion maturing bonds in March but highlighted its significance in absorbing excess liquidity in the financial system. 

• The World Bank anticipates that inflation in the Philippines will stay within the 2-4% target range each month in 2024, with January marking a three-year low of 2.8%. The World Bank projects inflation to settle at 3.6% in 2024 and 3% in 2025. However, it emphasizes the importance of remaining vigilant due to potential risks, such as global disruptions affecting supply chains and imports, especially for countries like the Philippines reliant on food and fuel imports.

FWD Guidance: Uncertainty leads to downside risks, but diversification and a long-term investment horizon still provide the best chance for financial success.

Sources: (1) https://edition.cnn.com/2024/02/27/economy/consumer-confidence-february/index.html (2) https://business.inquirer.net/447566/british-grocery-price-inflation-slows-to-5-3-kantar-says (3) https://www.cnbc.com/2024/02/26/jamie-dimon-is-cautious-about-everything-as-he-sees-risks-to-a-soft-landing.html (4) https://www.bworldonline.com/top-stories/2024/02/23/577401/moodys-analytics-hikes-phl-growth-forecast/ (5) https://www.bworldonline.com/top-stories/2024/02/28/578202/neda-board-adds-23-flagship-projects/  (6) https://www.bworldonline.com/economy/2024/02/27/578234/wb-phl-inflation-seen-within-2-4-band-each-month-of-2024/ (7) https://www.bworldonline.com/top-stories/2024/02/26/577676/govt-raises-p585b-from-rtb-offering/

Disclaimer: The purpose of this article is to inform and should not be taken as an advice or offer to purchase securities. Seek professional advice before making a decision based on this presentation. Information given does not represent the views of FWD and its agents and employees.