LOCAL EQUITIES may trade sideways this week due to bargain hunting and a lack of fresh leads.
The Philippine Stock Exchange index (PSEi) declined by 95.23 points or 1.47% to 6,379.03 on Friday, while the broader all shares index went down by 33.65 points or 0.97% to close at 3,422.28.
Week on week, the PSEi fell by 89.04 points or 1.38% from its close of 6,468.07 on June 30.
Online brokerage 2TradeAsia.com said in a report that the PSEi fell due to profit taking as investors shrugged off data showing slower June inflation.
“Local inflation came in slower as expected, driven by heavily-weighted baskets. This sequential improvement in CPI (consumer price index) strengthens the case for another status quo on the BSP’s (Bangko Sentral ng Pilipinas) end next Monetary Board meeting in August),” 2TradeAsia.com said.
Inflation slowed to 5.4% in June from 6.1% in May 2023 and June 2022, but marked the 15th straight month that the consumer price index exceeded the BSP’s 2-4% target for the year.
The June print was slightly lower than the 5.5% median estimate by 17 analysts in a BusinessWorld poll conducted the prior week.
For the first six months, inflation averaged at 7.2%, still higher than the central bank’s 5.4% forecast for 2023.
The BSP will hold its next policy review on Aug. 17. It has held rates steady in its last two meetings amid expectations that inflation will return within its target band by the end of the year.
For this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said bargain hunting may persist as prices remain attractive.
“However, worries over a possible resumption of the Federal Reserve’s monetary tightening may still weigh on investors’ sentiment. This is as further rate hikes by the Fed put downside risks on the US and the global economy. Investors are also expected to wait for catalysts that could strengthen market confidence. As they wait, trading participation could remain tepid,” Mr. Tantiangco said in a Viber message.
The Fed last month paused its tightening cycle after hiking rates for 10 straight meetings by a total of 500 basis points (bps) to a range between 5% and 5.25%.
Fed Chair Jerome H. Powell has said one or two more 25-bp hikes are possible within the year as stronger-than-expected economic data support further tightening.
The US central bank will next meet to review policy on July 25-26.
“While waiting for turnover to thicken over the next few weeks, upcoming earnings might provide the much-needed electric touch,” 2TradeAsia.com added.
Mr. Tantiangco placed the PSEi’s support at 6,400 and resistance at 6,600, while 2TradeAsia.com put immediate support at 6,300 and resistance at 6,600. — A.H. Halili with Reuters