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Overseas news
Major US stock indices ended lower on Monday. Investors showed caution while waiting for key inflation data this week that may hint at the likelihood of interest rate cuts.
The US Federal Reserve (the Fed) looks at economic indicators like the inflation rate when deciding what to do with interest rates. Rate cuts may happen if inflation eases to the Fed’s target level.
These lower rates can make it less expensive to borrow money, which may help boost economic activity and renew investor interest in stocks.
Additionally, US-China trade developments also likely affected investor outlook. President Donald Trump signed an executive order delaying the start of higher tariffs on Chinese goods until November 10.
The 90-day extension pauses triple-digit duties on imports from China. The US and China make up a huge share of the global economy and so their trade relations are of concern to investors around the world.
Local developments
The Bangko Sentral ng Pilipinas (BSP) may deliver 2 more rate cuts this year, said BSP Governor Eli Remolona Jr. He told reporters a rate cut at the Monetary Board’s meeting on August 28 is “quite likely.”
Meanwhile, net inflows of foreign direct investments (FDI) in May rose 21.3% year-on-year to reach $586 million. However, the latest figure marks a 26.9% decline in the first 5 months of the year.
FDI is an important source of external financing for developing countries. It refers to a substantial stake in, or complete ownership of, a company or project by a foreign organization or government.
Further, the 60-day suspension of rice imports is unlikely to be extended after it ends in October, said Finance Secretary Ralph Recto. He added there are no plans yet to raise tariffs on rice.
The suspension is set to start on September 1 and is aimed at protecting local farmers from falling prices. Efforts to control the prices of food staples may also impact consumers and the inflation rate.
Locally, the possibility of rate cuts offers a bright spot though some uncertainty remains globally. Being cautious with your investing decisions may be the right move for now.
