PHILIPPINE SHARES may move sideways this week, with the market awaiting the Bangko Sentral ng Pilipinas’ (BSP) policy meeting as it awaits hints on its policy path and inflation outlook.
On Friday, the bellwether Philippine Stock Exchange index (PSEi) jumped by 2.11% or 119.53 points to close at 5,782.70, while the broader all shares index went up by 1.39% or 44.12 points to end at 3,218.81.
This was PSEi’s best close in nearly three weeks or since it closed at 5,788.87 on Sept. 28.
Week on week, the benchmark stock index gained 81.71 points from Oct. 9’s finish of 5,700.99.
“The market pushed higher on Friday to close up 2.11% at 5,782.70, marking a three-week high and managing to hold above its 20-day exponential moving average. The pullback in the US Treasury yields provide some near-term relief, although it remains uncertain whether the decline can be sustained given persistent inflation pressures and expectations for further Federal Reserve tightening,” COL Financial Group, Inc. Research Analyst Denise Joaquin said in a Viber message.
“Bargain hunting aided by easing global yields helped the market extend its gains in last week’s trading. However, value turnover was still tepid, implying that the rise had weak conviction as downside risks kept many investors on the sidelines,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.
For this week, the BSP’s policy meeting will be the main trading driver for the market, along with movements in global oil prices and the peso, as these could affect the inflation outlook, Mr. Tantiangco said, noting that PSEi may continue to test the 5,800 resistance level.
“Expectations that the BSP will raise policy rates by another 25 basis points are currently mounting following the latest inflation print which came in at 7.2%. Said expectations are expected to weigh on the market. A rate hold would be deemed as a positive surprise, while a rate hike of more than 25 basis points would be deemed as a negative surprise for the market,” he said.
Global oil prices also remain elevated despite some pullback due to continued uncertainty in the Middle East, Mr. Tantiangco noted.
“Last week, the peso hit a new record low. Moving forward, it may continue to test the 63 level. A rebound is expected to give the local market support. However, a further depreciation of the peso may weaken the local market,” he added. On Thursday, the peso logged a new all-time-low close of P63.06 against the dollar.
Ms. Joaquin said investors will also focus on the scheduled Oct. 20 listing of Mynt, Inc., with potentially strong demand for the stock on its market debut likely to cause price swings.
“Third-quarter earnings season is also set to begin, providing a test of how corporate earnings held up in the July to September period amid elevated inflation and continued oil and foreign-exchange volatility,” she added. — Alexandria Grace C. Magno