Global and Philippine Market Update

April 17 to April 23, 2025

Global Markets

Global Stocks experienced significant volatility driven by developments in US Trade Policy and Federal Reserve dynamics.

• President Trump's sharp criticism of Fed Chair Jerome Powell caused financial markets to tumble, raising questions about the reliability of traditional "safe haven" assets during times of economic uncertainty. The US dollar and long-term bonds, typically seen as stable investments, experienced significant declines, with the 10-year yield climbing above 4.4% and the dollar index falling below the 100 mark. This shift in investor behavior, labeled the "sell America" trade, signaled a move away from US assets toward alternatives like gold and speculative investments such as bitcoin. However, markets rebounded on Wednesday after Trump reassured the public that he had no plans to dismiss Powell, alleviating concerns about the Federal Reserve's independence. Additionally, Trump adopted a more conciliatory stance on tariffs, suggesting that duties on Chinese imports might eventually be reduced. These developments fueled a rally in US equities, with the S&P 500 gaining nearly 1.7%, the Dow Jones Industrial Average rising 1.1%, and the Nasdaq surging by 2.5%.
  
  
• The International Monetary Fund (IMF) has significantly lowered its global growth forecast for 2025, citing the impact of U.S. President Donald Trump's tariff policies. The IMF now expects the global economy to expand by 2.8% this year, a 0.5 percentage point downgrade from its January projection. Growth for 2026 is also revised downward to 3.0%, reflecting ongoing trade tensions and policy uncertainty. IMF Chief Economist Pierre-Olivier Gourinchas described this shift as a "new era" in the global economic system, which has operated under a stable framework for the past 80 years.

Philippine Stocks

Philippine Stocks  edged higher on tariff pause and bargain hunting.

• Philippine stocks continued their upward trend, buoyed by Wall Street’s strong rebound and easing concerns over trade tensions. The PSEi gained 0.37%, closing at 6,168.48, while the broader all shares index rose 0.18% to 3,658.78. Analysts attributed the gains to positive cues from Wall Street, an improving peso, and stronger corporate fundamentals. However, market movement remained cautious, with investors still wary of global economic uncertainties stemming from U.S. tariff policies.
  
  
• The Philippine economy remains to be one of the most resilient in the region despite growing recession risks and escalating trade tensions. According to BPI CEO Mr. Limcaoco, the country is relatively insulated due to strong domestic consumption and controlled inflation. UBS economists also maintain a positive outlook, citing minimal exposure to trade disruptions and potential monetary policy easing. While new U.S. trade measures impose a 17% tariff on the Philippines, it remains one of the least affected ASEAN countries. Despite broader concerns across the Asia-Pacific region, Moody’s warns that rising trade barriers could disrupt supply chains and increase costs. However, the Philippines’ domestic focus, low inflation, and potential monetary easing position it well to withstand global uncertainties.

Philippine Bonds

Philippine Bond yields edged higher amid liquidity tightening and treasury auctions.

• The Philippine government successfully raised P25 billion through Treasury bills (T-bills) on Monday, despite higher yields driven by the ongoing offering of new 10-year benchmark bonds. The auction attracted P73.913 billion in bids, nearly three times the amount offered. The 91-day T-bills fetched an average rate of 5.546%, up 12.4 basis points from the prior auction. The 182-day T-bills saw an average yield of 5.675%, rising 1.8 basis points, while the 364-day T-bills recorded a slight decline to 5.691%, down 2.3 basis points.
  
  
• The BTr raised an initial P135 billion from the new 10-year fixed-rate Treasury notes it auctioned off last April 15. This was more than four times the initial P30-billion offering, as tenders reached P197.3 billion. The new 10-year bond fetched a coupon rate of 6.375%. The public offer period closed April 23.
  
  
• The BSP reduced policy rates by 25 bps to 5.50% as softer inflation allowed the BSP to resume their easing cycle in the face of global headwinds from sweeping US Tariffs. As the whole world worries about heightened trade protectionism on economic growth, the Philippines is experiencing something other countries do not, which is tame inflation. This gives the BSP room to lower rates multiple times this year to support growth.

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://business.inquirer.net/519072/bsp-cuts-policy-rate-by-25-bps-to-5-5, (2) https://www.philstar.com/business/2025/04/22/2437348/amid-global-recession-risks-philippines-a-relatively-safe-haven?dicbo=v2-lsda4AS (3) https://manilastandard.net/business/314582197/imf-slashes-global-growth-outlook.html (4) https://uk.finance.yahoo.com/news/stock-market-today-dow-rises-400-points-nasdaq-gains-25-but-mega-rally-fades-in-late-trading-133419757.html (5) https://www.bworldonline.com/banking-finance/2025/04/22/667022/govt-fully-awards-treasury-bills-at-mixed-rates-as-demand-shifts

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.