Global and Philippine Market Update

June 26 to July 2, 2025

Global Markets

Global Stocks edged higher as markets monitored trade negotiation developments.

• U.S. stocks continued to advance as investors closely watched developments in trade negotiations and fiscal policy ahead of the June jobs report. The S&P 500 and Nasdaq rose respectively, both ending at record highs, while the Dow was little changed. Markets were influenced by a weaker-than-expected ADP private payrolls report showing a surprise decline of 33,000 jobs in June, fueling expectations of a possible Fed rate cut if Thursday’s labor data also disappoints. Investors were also monitoring the U.S. House vote on a major tax-and-spending bill and a looming July 9 tariff deadline.
  
  
• The Senate narrowly passed President Trump's sweeping tax and spending legislation, dubbed the ”Big, Beautiful Bill“ in a 51-50 vote after a marathon session, with Vice President JD Vance casting the tie-breaking vote. The bill includes trillions in extended tax cuts and increased funding for border security, defense, and energy production, offset by significant reductions to healthcare and nutrition programs. Despite concerns over its projected $3.3 trillion deficit increase and potential loss of Medicaid coverage for millions, last-minute negotiations secured enough Republican support. Senate Majority Leader John Thune played a key role in rallying votes, while Democrats attempted to delay the process through procedural tactics. The bill now returns to the House for final approval before the July 4 deadline.
  
  
• Fed Chair Jerome Powell signaled that a July interest rate cut remains a possibility, prompting a rise in market bets on easing. While Powell emphasized the Fed’s data-dependent approach, his refusal to rule out a near-term cut fueled investor optimism. Traders responded by pricing in higher odds of a rate reduction at the upcoming policy meeting, citing signs of slowing inflation and economic momentum. The Fed’s cautious tone reflects its balancing act between supporting growth and maintaining price stability amid evolving economic conditions.

Philippine Stocks

Philippine Stocks  advanced amid looming tariff deadline.

• The PSEi continued to hover above 6,400 levels for the week but modestly declined on Wednesday as investors adopted a cautious stance ahead of the looming July 9 U.S. reciprocal tariff deadline. Market sources cited global trade uncertainty and U.S. Federal Reserve concerns that Trump’s tariffs could hinder policy easing. The downturn was led by losses in mining, oil, financials, and services sectors, but partially offset by gains in property, industrials, and holding firms. Net foreign buying tapered off significantly.
  
  
• The Philippines’ manufacturing sector showed modest growth as the S&P Global Manufacturing PMI rose to 50.7 from 50.1 in May, marking its third consecutive month of expansion and the fastest pace in two months. The improvement was driven by a rebound in production, increases in new orders, and the first rise in employment in four months. However, export demand remained weak amid global trade uncertainties, and supply chain constraints persisted due to material shortages and delivery delays. Inflationary pressures slightly eased, with slower increases in input and output prices. Business sentiment improved but remained below historical averages. Among ASEAN peers, only Thailand and the Philippines registered PMI growth in June, while others saw contractions.

Philippine Bonds

Philippine Bond yields eased on favorable macro signals.

• Bank of America (BofA) expects the BSP to continue cutting interest rates in 2025, projecting another rate cute in October, that would bring the key policy rate down to 5% by year-end. This outlook is driven by easing inflation, with BSP forecasting 2025 inflation at just 1.6%. The BSP has already cut rates twice this year under Governor Eli Remolona, who signaled further adjustments may come depending on data and risks. Despite potential pressure on the peso from continued easing and a current account deficit, BofA believes the policy stance will support economic growth. The Philippines is also seen as relatively shielded from U.S. tariff pressures compared to regional peers.
  
  
• Bank of America (BofA) Global Research has affirmed its mid year growth forecast for the Philippines at 5.5% in 2025, unchanged from its April estimate, and projects GDP growth of 5.6% in 2026 and 5.5% in 2027, ranking it the second fastest-growing economy in Southeast Asia over that period. BofA attributes this resilience to the Philippines’ domestic-oriented economy, which is less exposed to U.S. tariff risks, particularly since the country was only assigned a moderate 17% reciprocal tariff, the second lowest in ASEAN, and whose imports currently face just the baseline U.S. tariff of 10%, with higher reciprocal duties suspended until July 9. Furthermore, inflation is expected to remain subdued, driven by easing costs in rice, fuel, and transport, bolstering economic stability.

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.

Sources:(1) https://www.bworldonline.com/top-stories/2025/07/02/682661/manufacturing-pmi-expands-in-june/?amp, (2) https://business.inquirer.net/533808/bsp-to-continue-cutting-rates-in-2025-says-bofa, (3) https://www.bworldonline.com/economy/2025/07/02/682937/phl-growth-forecast-retained-at-5-5-bofa/?amp, (4) https://www.investopedia.com/dow-jones-today-07022025-11765134, (5) https://www.cbsnews.com/news/senate-debate-trump-one-big-beautiful-bill/ (6) https://www.msn.com/en-us/money/markets/fed-rate-cut-bets-rise-after-powell-doesnt-rule-out-july/ar-AA1HLMdE?ocid=BingNewsSerp

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.