Global Stocks gained as cheaper valuations provided an attractive buying opportunity. However, fear of recession and slower growth may temper any major rallies.
US Federal Reserve (Fed) officials look to raise rates by 0.50% in June and July, according to minutes from their meeting earlier this month. The aggressive stance was expected as the central bank tries to curb the highest inflation rate in four decades. The high inflation rate impacts the purchasing power of businesses and consumers, leading to an inability of the equity markets to gather any kind of momentum.
Philippine Stocks retreat as foreign investors shift away from the Philippines towards developed markets.
Month to date, as of May 25, US$355 million has left the Philippine market. Persistent high inflation, global monetary tightening and the war in Ukraine caused investors to move toward the relative safety of more developed markets.
Philippine Bond Yields with maturity of 10 years and greater increased by an average of 0.17% after the latest 10-year government auction.
The BSP is likely to increase rates again by 0.25% in June, according to BSP Governor Benjamin Diokno. The better-than-expected first quarter growth rate gave the BSP the ability to shift focus towards fighting inflation. He stated that he is “comfortable” with the adjustments and considers inflation “transitory” rather than permanent.
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.usnews.com/news/business/articles/2022-05-25/asian-stock-markets-higher-after-wall-st-sinks-further (2https://www.cnbc.com/2022/05/17/retail-sales-april-2022-up-0point9percent-vs-1point0percent-estimate.html (3) https://www.bworldonline.com/top-stories/2022/05/26/450967/marcos-names-new-finance-chief-and-central-bank-governor/ (4)https://www.bworldonline.com/stock-market/2022/05/24/450559/psei-sinks-further-as-net-foreign-selling-surges/ (5) https://blinks.bloomberg.com/news/stories/RCBI3CT0G1KW (6)https://blinks.bloomberg.com/news/stories/RCF10EDWX2PX (7) https://blinks.bloomberg.com/news/stories/RCDGQCGEZ1FK
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.
The information here is compiled from various credible sources and is a summary of a particular period only. Though we strive to provide accurate and complete information, we cannot guarantee that this article will be error-free.