Global and Philippine Market Update

July 3 to July 9, 2025

Global Markets 

Global Stocks held steady as tariff deadline deferred.

• Global stocks remained steady as U.S. President Donald Trump delayed the implementation of his proposed "reciprocal" tariffs, signaling openness to negotiations. In an executive order, Trump extended the deadline from July 9 to August 1, with the caveat that the new date was “not 100% firm.” He had earlier posted signed letters on Truth Social outlining new tariff rates, such as 25% levies on imports from South Korea and Japan, sent to leaders of several Asian countries. The delay eased investor concerns, lifting indices like Hong Kong’s Hang Seng and Japan’s Nikkei, while U.S. stock futures showed mixed movement. Treasury yields climbed, and the dollar strengthened against the yen and pound.

• Federal Reserve policymakers remain divided on whether to cut interest rates at their upcoming July 30 meeting, according to minutes from the June Federal Open Market Committee (FOMC) session. While “a couple” of members expressed openness to a July rate cut, most favored waiting for more data, citing concerns that President Donald Trump’s escalating tariffs could reignite inflation. Some officials argued that inflationary effects from tariffs may be modest and temporary, while others warned that recent price readings still exceed the Fed’s 2% target. With only limited support for an immediate cut, financial markets largely expect the Fed to hold rates steady until at least September, maintaining a cautious “wait-and-see” stance amid economic uncertainty.

Philippine Stocks

Philippine Stocks  advanced due to upbeat economic data and investor confidence.

• The PSEi edged higher to close at 6,504.34 on July 9, marking its strongest close in nearly two months, fueled by upbeat economic data and renewed investor confidence. Key indicators, including the labor force survey, manufacturing output, and bank lending figures, painted a healthy picture of the local economy. Optimism was further boosted by U.S. President Donald Trump’s openness to trade negotiations, easing concerns over recent tariff hikes. Most sectoral indices ended higher, led by services and property, while value turnover rose to P7.79 billion. Despite net foreign selling increasing to P220.66 million, market sentiment remained broadly positive.

• U.S. President Donald Trump announced a significant escalation in his trade policy by imposing a 20% tariff on all goods imported from the Philippines, effective August 1. This move is part of a broader wave of tariff hikes targeting multiple countries, including 30% duties on imports from Sri Lanka, Algeria, Iraq, and Libya, and 25% on Brunei and Moldova. However, the Philippine government plans to enter negotiations with the United States to reduce the newly imposed 20% tariff on its exports, according to Ambassador Jose Manuel Romualdez. While specific targets for reduction remain undisclosed, Romualdez confirmed that talks are being considered to ease the impact on the $14.2 billion Philippine export sector. In 2024, total U.S.-Philippines goods trade reached $23.5 billion, with the U.S. trade deficit widening to $4.9 billion due to a 6.9% rise in Philippine imports.

Philippine Bonds

Philippine Bond yields eased lower due to rate cut expectations.

• Yields on Philippine T-bills and T-bonds are expected to ease following dovish signals from the BSP, which hinted at two more rate cuts in 2025 amid subdued inflation and downgraded economic growth forecasts. On the secondary market, short-term T-bill rates showed mixed movements, while the 10-year bond yield dropped by 8.69 basis points to 6.2331%. The Bureau of the Treasury (BTr) plans to raise P250 billion in July, P125 billion each from T-bills and T-bonds, to help fund the government’s ₱1.56-trillion budget deficit. Analysts expect continued investor interest in long-term debt, though liquidity surges may influence yield direction.

• The P50 daily minimum wage hike for Metro Manila workers, set to take effect on July 18, 2025, is unlikely to significantly fuel inflation, according to economists and analysts. The increase, raising non-agricultural wages to ₱695 and agricultural/service sector wages to ₱658, is considered modest and well-calibrated, especially compared to earlier proposals of P100–P200. Experts noted its limited coverage and minimal impact on business expenses and profits, suggesting that any inflationary effects would be manageable and possibly offset by productivity gains. 

• Philippine manufacturing output rose by 4.9% year-on-year for the month of May, marking its fastest growth in ten months, driven primarily by strong gains in food production and transport equipment. The Volume of Production Index (VoPI) showed notable improvement, although seasonally adjusted figures revealed a 2.9% month-on-month decline. Average capacity utilization edged up to 76.9%, reflecting steady factory activity. Economists attributed the growth to robust domestic demand, despite concerns over U.S. tariff threats that could dampen export momentum. The country’s trade deficit narrowed to $3.29 billion, as exports surged by 15.1% and imports fell by 4.4%, further supporting manufacturing performance.

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.bworldonline.com/top-stories/2025/07/10/684430/philippines-plans-to-negotiate-with-us-to-lower-tariffs-envoy-to-washington-says/ (2) https://www.bworldonline.com/top-stories/2025/07/10/684428/trump-raises-tariff-rate-on-philippines-to-20/ (3) https://www.bworldonline.com/top-stories/2025/07/10/684327/ncr-wage-hike-unlikely-to-stoke-prices/ (4) https://www.bworldonline.com/top-stories/2025/07/09/684065/phl-manufacturing-output-growth-hits-10-month-high-in-may/ (4) https://www.bworldonline.com/stock-market/2025/07/09/684239/pse-index-surges-to-6500-level-on-positive-data/ (5) https://www.bworldonline.com/stock-market/2025/07/09/684239/pse-index-surges-to-6500-level-on-positive-data/ (6) https://www.investopedia.com/will-the-fed-lower-interest-rates-in-july-policymakers-are-split-fomc-minutes-show-11769229 (7) https://www.investopedia.com/global-stocks-mostly-higher-as-trump-pushes-back-reciprocal-tariffs-11767982

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.