Markets stabilize as investors process tariff concerns

Global and Philippine Market Update
March 13 to March 19, 2025

Global Markets

Global Stocks edged higher despite slower growth.

• Federal Reserve Chair Jerome Powell indicated that the Trump administration's initial policies, particularly the extensive import tariffs, seem to have led to slower economic growth and temporarily higher inflation in the U.S. He mentioned that central bank policymakers are now facing a period of "unusually elevated" uncertainty, making it difficult to predict future developments. Powell also noted that overall sentiment has declined due to policy "turmoil," with prices expected to rise faster than anticipated, largely because of President Donald Trump's plans to impose duties on imports from U.S. trading partners.
  
  
• According to the latest estimates from the Organization for Economic Co-operation and Development (OECD), both U.S. and global economic growth are expected to be lower than previously projected due to President Donald Trump's proposed tariffs on imported goods. The OECD forecasts that global GDP growth will slow from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026. This slowdown is attributed to higher trade barriers in several G20 economies and increased geopolitical and policy uncertainty, which are expected to negatively impact investment and household spending.

Philippine Stocks

Philippine Stocks climbed amid positive market sentiment.

• Philippine stocks reached the 6,300 level, mirroring gains in other Asian markets, as sentiment improved due to China's planned stimulus measures. The local market continued its upward trend, joining regional peers, after China announced a special action plan to enhance economic consumption. On Sunday, China's State Council unveiled this plan, which includes measures such as increasing residents' income and introducing a childcare subsidy scheme, according to Reuters.
  
  
• Philippine stocks rose on expectations of a rate cut from the Bangko Sentral ng Pilipinas (BSP) next month, as investors took advantage of bargain opportunities. The PSEi resumed its gains following recent dovish signals from local monetary officials. Finance Secretary Ralph G. Recto mentioned that there is a "high probability" of the BSP delivering a rate cut at its April 10 meeting. He added that the BSP could reduce benchmark borrowing costs by 50-75 basis points (bp) this year, potentially boosting economic growth and investments.

Philippine Bonds

Philippine Bond yields steady as rising global rates offset potential central bank cuts.

• The government successfully awarded the full amount of Treasury bonds (T-bonds) it offered on Tuesday, despite a higher average rate due to rising global yields amid uncertainties in developed markets. The reissued 10-year bonds, with a remaining life of eight years and 10 months, were awarded at an average rate of 6.207%. The Bureau of Treasury (BTr) raised PHP 30 billion as planned through these bonds, with total bids reaching PHP 58.947 billion, nearly double the amount on offer. This increased the total outstanding volume for the bond series to PHP 366.9 billion, according to a statement from the Treasury.
  
  
• Finance Secretary Ralph G. Recto stated that further monetary easing will be necessary to support economic growth, noting a high likelihood of the central bank cutting rates next month. He emphasized the importance of reducing interest rates, pointing out that with inflation under control in the Philippines, there is room for a rate cut at the next meeting. Recto, who is also a Monetary Board member, mentioned that there is a high probability of implementing a rate cut at the upcoming meeting. The Monetary Board is scheduled to have its next rate-setting meeting on April 10.

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.reuters.com/markets/us/with-interest-rates-hold-feds-economic-projections-take-center-stage-2025-03-19/ (2https://www.cnbc.com/2025/03/17/oecd-cuts-us-and-global-economic-growth-outlooks-as-trumps-trade-tariffs-weigh.html (3) https://www.bworldonline.com/stock-market/2025/03/17/659836/psei-rises-to-6300-level-on-china-stimulus-plan/ (4) https://www.bworldonline.com/stock-market/2025/03/19/660362/phl-stocks-rise-as-market-expects-april-bsp-cut/ (5) https://www.bworldonline.com/top-stories/2025/03/20/660450/bsp-rate-cut-likely-in-april-recto/ (6) https://www.bworldonline.com/banking-finance/2025/03/19/660181/treasury-fully-awards-reissued-bonds-at-higher-average-rate/

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.