PSEi to move sideways ahead of CPI, labor data

LOCAL SHARES are expected to move within a limited range this week as investors await the release of November consumer price index (CPI) and labor data.

The bellwether Philippine Stock Exchange index (PSEi) lost 245.34 points or 3.64% to close at 6,489.65 on Friday, while the broader all shares index declined by 81.38 points or 2.32% to 3,419.65.

Week on week, the PSEi decreased by 117.29 points or 1.78% from its close of 6,606.94 on Nov. 25.

Online brokerage said in a report that the PSEi declined on Friday as investors opted to pocket their gains ahead of a shortened trading week and on optimism after the US Federal Reserve hinted at slower rate hikes.

“The Fed’s shift in tone towards ‘slowing down’ its aggressive hawkish stance on policy rates caused a ripple of optimism across capital markets,” said.

Fed Chairman Jerome H. Powell said last week that it was time to look at smaller interest rate hikes, but said borrowing costs may remain high for a while to help bring down elevated inflation.

The US central bank has raised borrowing costs by 375 basis points since March, with the fed funds rate now at the 3.75-4% range. The Fed’s next meeting is scheduled on Dec. 13-14.

“The local stock market gauge, the PSEi, corrected sharply lower for the second straight day, though still considered a healthy downward correction or profit taking after hefty gains recently,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

For this week, said investors are awaiting the release of November CPI data, which could provide leads on the Bangko Sentral ng Pilipinas’ (BSP) next move. The BSP’s last meeting for this year is on Dec. 15.

A BusinessWorld poll of 15 analysts held last week yielded a median estimate of 7.8% for November headline inflation. If realized, this would breach the BSP’s 2-4% target for the eighth straight month. added that the non-working day on Dec. 8 in commemoration of the Feast of the Immaculate Conception of Mary will give the PSEi room to consolidate.

“Finding the correct play for 2023 is going to be the crux of most trades in the next few weeks — monitor for possible spikes in volume as funds find rationality over this wall of worry,” it said.

“For the coming days, any sustained gains above the 6,430 immediate major resistance would still help maintain the integrity of the underlying upward trend over the past two months,” Mr. Ricafort added.

He said investors will also be pricing in the results of the November labor force survey and gross international reserves data slated to come out on Nov. 7.

Mr. Ricafort placed the PSEi’s immediate minor support at 6,360 to 6,520 and next resistance at 6,600.

Meanwhile, put the PSEi’s immediate support at the 6,350 to 6,400 range and resistance at 6,800. — Justine Irish D. Tabile