Global and Philippine Market Update

Nov. 23  to Nov. 29, 2023

Global Markets

Global Stocks are expected to edge higher as inflation is anticipated to ease further.

• Gas prices have declined since peaking in September as Brent Crude trades around USD 80 a barrel. The focus has shifted from Middle East supply concerns to signs of oversupply and weak demand in China. OPEC members’ postponed meeting until November 30 adds uncertainty, with expectations of Saudi Arabia pushing for deeper production cuts to offset rising non-OPEC supply, potentially leading to continued pump price declines until year-end.

• Fed Governor Christopher Waller expressed confidence in the current policy rate to control inflation, indicating a potential consideration of rate cuts if inflation continues to ease in the next three to five months. This contrasts with his previous stance favoring tighter policies and higher rates. He cited several areas where economic activity is moderating, including retail sales to the labor market to manufacturing.

• The CNBC CFO Council survey for the fourth quarter, conducted between November 14 and November 24 with responses from 30 CFOs, reveals that finding and hiring qualified workers is becoming easier. This suggests a potential easing in the hot labor market, supporting the idea that peak inflation period is over, and the economy is slowing. More CFOs are now leaning towards a “soft landing” rather than anticipating a recession in 2024.      

Philippine Stocks

Philippine Stocks trend higher on positive momentum.

• Stocks moved higher as investor sentiment was lifted by declining global oil price, and window dressing ahead of the month-end. Easing oil prices could provide a boost to fourth-quarter growth, potentially helping to approach the government’s low-end target of 6% for the year. Equities maintain their upward momentum, posing a challenge towards the 6,400 level.

• The Philippines is anticipated to achieve upper-middle-income status by 2025 or 2026, indicating a gross national income (GNI) per capita within the range of USD 4,466 to USD 13,845. The country’s outlook is expected to benefit from robust domestic demand, a strong labor market, ongoing public investment policy reforms. The World Bank aims to support the Philippines through investments that address issues such as reducing the digital divide, enhancing education quality, addressing malnutrition, and assisting less developed areas in the country.

Philippine Bonds

Philippine Bond yields fall as inflation trends lower.

• The Bureau of Treasury (BTr) fully awarded a re-issued 7-year treasury bond with a remaining term of five years and 10 months at an average rate of 6.099%. The yield was more than 10 basis points lower compared to comparable bonds in the secondary market. Yields fell due to the strong peso and lower global oil prices, which helped ease inflationary pressures.

• S&P 500 Global has affirmed the Philippines “BBB+” sovereign credit rating with a stable outlook, acknowledging the country's sustained economic recovery and robust external position. The rating reflects above-average economic growth potential compared to peers, supported by stable macroeconomic fundamentals, sound policies, and fiscal consolidation. S&P recognized the government’s focus on infrastructure development, fiscal measures, and key reforms such as public-private partnership (PPP) and the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.      

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://www.cnbc.com/2023/11/28/feds-waller-expresses-confidence-that-policy-is-in-the-right-place-to-bring-down-inflation.html (2) https://www.cnbc.com/2023/11/28/big-employers-think-workers-have-finally-lost-control-of-job-market.html (3) https://edition.cnn.com/2023/11/28/economy/gas-prices-drop-consumer-spending/index.html (4) https://www.bworldonline.com/stock-market/2023/11/28/560272/stocks-up-on-easing-oil-prices-window-dressing/ (5) https://www.bworldonline.com/top-stories/2023/11/27/559816/philippines-could-reach-upper-middle-income-status-by-2025-or-2026/ (6) https://blinks.bloomberg.com/news/stories/S4VPDHMB2SJW (7) https://www.pna.gov.ph/articles/1214550

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.