Global and Philippine Market Update

March 6 to March 12, 2025

Global Markets

Global Stocks trended lower amid a possible economic slowdowns due to tariffs.

•       President Donald Trump and senior White House officials are preparing Americans for a potential economic slowdown, which they believe would lead to stronger growth in the future. Despite concerns about tariffs, a slowing labor market, and possible negative growth in the first quarter, they maintain an optimistic outlook while cautioning about short-term disruptions. Trump emphasized the transitional nature of their economic policies and acknowledged the likelihood of some disruption but expressed confidence in the long-term benefits.

•       Federal Reserve Chairman Jerome Powell stated that the central bank will wait to see the impact of President Donald Trump's aggressive policy actions before making further decisions on interest rates. Amid market concerns over tariffs and other issues, Powell emphasized patience in monetary policy due to the high level of uncertainty. He noted that the White House is implementing significant changes in trade, immigration, fiscal policy, and regulation, and the overall effect of these changes will influence the economy and future monetary policy.

•       Prices for goods and services rose less than expected in February, providing some relief amid concerns about the impact of tariffs on inflation, according to the Bureau of Labor Statistics. The consumer price index (CPI) increased by a seasonally adjusted 0.2% for the month, bringing the annual inflation rate to 2.8%. Excluding food and energy, the core CPI also rose 0.2% and was at 3.1% on a 12-month basis, the lowest since April 2021. The report comes amid heightened concerns over a trade war, with President Donald Trump imposing tariffs on steel, aluminum, and goods from China. Federal Reserve officials are closely monitoring these developments, as tariffs can have modest impacts on inflation. 

Philippine Stocks

Philippine Stocks lost momentum following the arrest of former President Rodrigo Duterte.

•       Philippine shares gained momentum, with the index reaching its highest close in seven weeks prior to the arrest of former President Duterte. Investors were optimistic that the Bangko Sentral ng Pilipinas (BSP) would resume its easing cycle next month, driven by a positive inflation outlook and measures to reduce food prices. The market's rise was further supported by strong corporate results for 2024, a better-than-expected consumer price index (CPI) reading, a strengthening peso, and a rebound in US equities.

•       The arrest of former President Rodrigo Duterte caused the local stock market's index to drop by 2% on Tuesday, wiping out some of the recent gains. Investors were alarmed by potential "political instability." Foreign investors also withdrew from the Philippine market, with outflows amounting to P350.28 million. The Philippine Stock Exchange index (PSEi) fell to a low of 6,156.97 during the day following the news of Duterte's arrest.

Philippine Bonds

Philippine Bond yields remained rangebound as investors anticipated further rate cuts.

•       The Bangko Sentral ng Pilipinas (BSP) may resume its easing cycle as early as its next meeting on April 10, according to BSP Governor Eli M. Remolona, Jr. He indicated that a rate cut is still "on the table" and signaled the possibility of several more cuts throughout the year. The central bank had previously kept rates steady at 5.75% in February after three consecutive 25-basis point cuts in August, October, and December. Remolona mentioned that the BSP considers various scenarios in its policy decisions, balancing inflation and growth. He also noted the potential for further reserve requirement ratio (RRR) cuts within the year, with the RRR for universal and commercial banks set to be reduced to 5% later this month.

•       Analysts predict that the BSP is likely to reduce borrowing costs by up to 50 basis points this year, driven by current GDP figures and inflation rates. Bank of America Global Research anticipates a 25-basis-point cut in both the second and fourth quarters, bringing the overnight borrowing rate to 5.25% by the end of 2025. Central banks across ASEAN are cautiously monitoring economic conditions to find opportunities for easing monetary policies amid global uncertainties.

FWD Guidance: Uncertainty leads to downside risks, but diversification and a long-term investment horizon still provide the best chance for financial success.

Sources: (1https://www.cnbc.com/2025/03/10/trump-says-transition-period-likely-for-economy-and-you-cant-watch-the-stock-market.html (2) https://www.cnbc.com/2025/03/07/powell-says-fed-is-awaiting-greater-clarity-on-trump-policies-before-making-next-move-on-rates.html (3) https://www.cnbc.com/2025/03/12/cpi-inflation-report-february-2025.html (4) https://www.bworldonline.com/stock-market/2025/03/10/658333/psei-surges-to-6300-level-on-bsp-rate-cut-hopes/ (5) https://business.inquirer.net/511929/duterte-arrest-fears-of-political-instability-wipe-out-psei-gains (6) https://www.bworldonline.com/top-stories/2025/03/13/659037/bsp-could-cut-by-50-bps-this-year/ (7) https://www.bworldonline.com/top-stories/2025/03/12/658790/bsp-april-rate-cut-still-on-the-table/

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.