Global and Philippine Market Update

Nov. 28 to Dec. 4, 2024

Global Markets

Global Stocks moved higher as a tech rally overshadowed heightened geopolitical risks. 

• Global shares were boosted by a rally in U.S. tech stocks and expectations of lower interest rates, despite political turmoil in South Korea and France. In South Korea, lawmakers called for President Yoon Suk Yeol's resignation or impeachment after he declared and then reversed martial law. In France, the euro traded near a two-year low ahead of a no-confidence vote. French lawmakers ousted Prime Minister Michel Barnier's coalition, deepening the political crisis.
  
  
• Federal Reserve Governor Christopher Waller expressed his support for an interest rate cut in December, citing current economic data and forecasts that predict inflation will continue to decline to 2% over the medium term. However, he emphasized that this decision could change if upcoming data shows unexpected inflationary trends. Waller noted that recent data suggests progress on reducing inflation might be stalling. In October, the Fed's preferred inflation measure, the personal consumption expenditures price index, showed an annual increase to 2.3% for headline inflation and 2.8% for core inflation, both above the Fed's 2% target.

Philippine Stocks

Philippine Stocks ended higher amid bargain hunting.

• Philippine shares rebounded, climbing back above the 6,700 mark as investors sought bargains after a market decline last week. According to Japhet Louis O. Tantiangco, Senior Research Analyst at Philstocks Financial, Inc., the local market's recovery was driven by bargain hunting. Additionally, expectations that November inflation would remain toward the lower end of the government's target contributed to the day's gains.
  
  
• The Board of Investments (BoI) has approved investment pledges totaling P1.58 trillion as of November, nearing its P1.6-trillion target for the year. According to a statement from the Department of Trade and Industry (DTI) on Wednesday, the approved investments for the first 11 months account for 98.7% of the annual target. The government noted a rise in renewable energy projects following the removal of the previous 40% cap on foreign ownership in the sector.

Philippine Bonds

Philippine Bond yields trended lower as inflation stays within the central bank’s target.

• Philippine annual inflation rose to 2.5% in November from 2.3% in October, driven by higher food prices due to typhoons and increased transport costs. This brought the average inflation rate to 3.2%, within the central bank's target range of 2% to 4%. Core inflation, excluding food and energy, slightly increased to 2.5% from 2.4% in October. The main contributors were faster rises in food and non-alcoholic drink prices and a slower decrease in transport prices.
  
  
• The government fully awarded the Treasury bills (T-bills) offered, despite most rates rising due to expectations of higher Philippine headline inflation in November. The Bureau of the Treasury (BTr) successfully raised P15 billion as planned from the T-bills auction, with total bids reaching P57.8 billion, nearly four times the offered amount and surpassing the P51.665 billion in tenders from the previous week.

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/2024/12/02/feds-waller-leaning-toward-a-rate-cut-but-worries-about-inflation-.html (2) https://www.reuters.com/markets/global-markets-wrapup-1-2024-12-04/ (3) https://www.bworldonline.com/top-stories/2024/12/05/639537/philippines-november-inflation-accelerates-as-typhoons-impact-food-prices/ (4) https://www.bworldonline.com/stock-market/2024/12/02/638695/pse-index-back-above-6700-on-bargain-hunting/ (5) https://www.bworldonline.com/top-stories/2024/12/05/639405/boi-approved-investments-hit-p1-58t/ (6) https://www.bworldonline.com/banking-finance/2024/12/03/638705/t-bill-rates-mostly-higher-before-inflation-report/

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.