Global and Philippine Market Update

July 24 to July 30, 2025

Global Markets

Global Stocks slipped as Fed dampened rate cut hopes ahead of tariff deadline.

• The S&P 500 and Dow Jones dipped slightly, while the Nasdaq edged higher as the equity market finally reversed course and ended its six-day streak of record closes, which were driven by strong corporate earnings and upbeat economic data. Stocks lost momentum after Fed Chair Jerome Powell emphasized that future rate cuts were not yet assured, and he cautioned about lingering inflation pressures and uncertainties related to tariffs.
  
  
• The Fed voted 9-2 to leave its benchmark federal funds rate unchanged at 4.25%–4.50%, rebuffing President Donald Trump’s demands for aggressive cuts. The decision was met with opposition from Governors Michelle Bowman and Christopher Waller who have advocated for easing and have argued that inflation is under control and labor market risks are rising. The post-meeting statement noted that economic growth moderated in the first half of the year, unemployment remains low, labor market conditions are solid, inflation is somewhat elevated, and uncertainty has increased compared with June’s assessment. At his press conference, Fed Chair Powell stressed that no decision has been made for the September meeting and highlighted the Fed’s focus on preventing one-time price shocks, such as those from tariffs from becoming entrenched inflation. On the same day, Commerce Department data showed second-quarter GDP grew at a 3% annualized rate, partly reversing earlier import surges ahead of tariffs, while core inflation slowed to 2.5% (2.1% on the Fed’s preferred gauge), prompting traders to cut the odds of a September rate reduction to 46% from 64%.
   

Philippine Stocks

Philippine Stocks continued to decline ahead of Fed meeting and tariff deadline.

• PSEI continued to extend its losing streak with the benchmark closing at 6,381.23 on July 30, as investors stayed on the sidelines ahead of the US Federal Reserve’s policy decision and an Aug. 1 deadline for potential tariff hikes. Trading was subdued as market participants weighed clues on the Fed’s rate outlook against rising trade uncertainties. Talks between US, Chinese, and South Korean officials aimed at extending a tariff truce appeared to go down to the wire, while companies continued rolling out earnings reports that could drive near-term sentiment.
  
  
• The IMF raised its 2026 growth forecast for the Philippines to 5.9 percent from 5.8 percent, keeping its 2025 projection unchanged at 5.5 percent, both figures outpacing fellow ASEAN economies but leaving next year’s outlook shy of the government’s 6–7 percent target. In its July World Economic Outlook, the IMF highlighted that despite a modest easing of trade tensions, U.S. tariffs on Philippine exports remain historically high, contributing to elevated global uncertainty. It projects global growth at 3.0 percent in 2025 and 3.1 percent in 2026, but warns that any re-escalation of trade barriers or further geopolitical shocks could shave 0.3 percentage points off global output in 2026. The Fund also flagged high public debt and limited fiscal space as vulnerabilities, urging Manila to safeguard central bank independence, restore fiscal buffers, and pursue long-term productivity gains. Local economists noted that the Philippine economy’s resilience—buoyed by robust domestic consumption and expansionary fiscal policy—underpins this stable outlook.

Philippine Bonds

Philippine Bond yields dropped as BSP hinted of an August rate cut. 

• Governor Eli M. Remolona Jr. said the BSP is still considering a rate cut at its August 28 policy meeting, which would be the third straight reduction and bring total easing to 125 basis points since August last year. He noted that key data, including second-quarter GDP—which is expected to show around 5.5 percent growth versus 5.4 percent in Q1—will inform the decision, with official figures due on August 7. Despite the U.S. imposing a 19 percent tariff on Philippine exports from August 1, Remolona judged its direct impact to be “modest” given exemptions and the country’s relatively small trading footprint. Looking ahead, he reaffirmed his projection for two more rate cuts in October and December, adding that a third additional cut would require “something very unusual.” Meanwhile, he described the peso’s recent trading around P57 to the dollar as comfortable, emphasizing that his primary concern remains potential inflationary pressures rather than exchange-rate levels.
  
  
• In June, the Philippines posted a $3.95 billion trade‐in‐goods deficit, narrower than the $4.34 billion shortfall a year earlier, as exports jumped 26.1 percent year-on-year to $7.02 billion and imports rose 10.8 percent to $10.98 billion. Export growth was driven largely by frontloading ahead of looming U.S. tariffs and favorable base effects, marking the sixth straight month of annual expansion despite a 4 percent sequential dip from May. On the import side, capital goods surged 31.1% led by telecommunications and transport equipment, while consumer and intermediate goods saw more modest gains. For the first half, the trade deficit narrowed to $23.97 billion from $25.06 billion as exports climbed 13.2 percent to $41.24 billion and imports increased 6 percent to $65.22 billion. Economic analysts note that seasonal factors and U.S. frontloading helped temper the deficit’s widening, but recommend strengthening domestic demand and export capacity to sustain this momentum

WD 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://www.cnbc.com/2025/07/30/fed-leaves-interest-rates-unchanged-as-expected.html?msockid=3ddff820b8076f231f26ed99b9606ef4 (2) https://www.investopedia.com/dow-jones-today-07302025-11781577 (3) https://www.bworldonline.com/stock-market/2025/07/30/688523/stocks-extend-slide-before-fed-tariff-deadline/ (4) https://www.bworldonline.com/top-stories/2025/07/30/688336/bsp-rate-cut-still-on-table-in-aug/ (5) https://www.bworldonline.com/top-stories/2025/07/30/688335/imf-raises-philippine-growth-forecast-for-2026/ (6) https://www.bworldonline.com/top-stories/2025/07/31/688568/trade-deficit-narrows-to-3-95-billion-in-june/

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.