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Market Momentum Rate Cut and Earnings News Could Send Indices Higher

The Philippine stock market has experienced significant fluctuations in recent weeks, but experts believe that a likely rate cut by the Bangko Sentral ng Pilipinas (BSP) and upcoming corporate earnings reports could provide a much-needed boost to indices. Following a four-week decline, the benchmark Philippine Stock Exchange index (PSEi) rebounded last Friday to 6,154.99, representing a week-on-week gain of 4.99%.

The market's bounce-back was supported by active trading, net foreign inflows, and a strengthening peso. While the market remains 5.7% down from the start of the year, analysts are optimistic that the momentum can continue.

This week's focus will be on the BSP's February 13 policy decision and outlook for the remainder of the year. Monetary authorities are expected to announce another 25-basis point rate cut, which could give the market a significant boost. A cut in policy rates together with a dovish outlook is expected to give the market a boost, said Philstocks Financial Inc. research manager Japhet Tantiangco.

However, some experts believe that the BSP's policymaking Monetary Board may leave interest rates steady, following the US Federal Reserve's decision to maintain its policy rates last January 28-29. Online stock brokerage firm 2TradeAsia.com noted that local metrics are looking steady, with inflation at 2.9% in January and GDP consensus stabilizing above average growth.

Earnings reports have also been a positive factor, with many companies beating core EPS (earnings per share) growth estimates. Above-estimated capex (capital expenditures) plans could provide a boost to valuation models, and investors are looking for bargain plays.

As the market navigates these developments, investors should be prepared for potential volatility. With the BSP's rate cut decision looming and earnings news expected to pour in, it will be an exciting week for the Philippine stock market. Will it continue its upward trend? Only time will tell.

Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.