PHILIPPINE STOCKS could rise this week as headline inflation likely eased last month and returned within the annual target set by the Bangko Sentral ng Pilipinas (BSP).
On Friday, the main Philippine Stock Exchange index (PSEi) rose 0.08% or 5.99 points to close at 6,897.54, while the broader all-stock index rose 0.25% or 9.52 points to close at 3,742.81.
Week on week, the PSEi fell 0.93% or 64.42 points from the closing level of 6,961.96 on August 22.
“Local stocks took a breather after nearly a month of upward movement ahead of the August inflation data release [this] week”, online real estate agency 2TradeAsia.com said in a market note.
“Last week’s trading shows that the local market is struggling to get past the 7,000 resistance level,” said senior research analyst Japhet Louis O. Tantiangco of Philstocks Financial, Inc. in a Viber message. “On the positive side, the market has managed to maintain its position above the 10-day exponential moving average.”
This week, Philippine stocks could rise ahead of the release of the August inflation report on September 5 (Thursday), he said.
“The market could move with an upward bias on expectations that Philippine inflation in August would be lower than July’s 4.4%. Confirmation of the said expectations could somehow boost the market in the latter part of the week,” he added.
A Business world a poll of 15 analysts yielded an average estimate of 3.7% for August’s consumer price index, within the BSP’s 3.2%-4% forecast for the month.
If achieved, this would be slower than July’s nine-month high of 4.4%, which was also the first time since November 2023 that headline inflation exceeded the BSP’s 2-4% target. This would also be lower than the 5.3% recorded in August 2023.
“Investors are also expected to take cues from other economic data, including the movement of the peso against the dollar, S&P Global Philippines’ Manufacturing Purchasing Managers’ Index for August and the Philippine labor force figures for July,” Mr. Tantiangco added .
He estimated the PSEi’s main support at 6,700-6,800.
Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said in an email that the market’s resistance is at the 7,000 level, specifically the high of 7,070.72 posted on April 2.
“The underlying uptrend of more than three weeks already remains intact as long as it remains above immediate support at levels from 6,635 to 6,705,” he said.
2TradeAsia.com placed the PSEi’s immediate support at 6,800 and resistance at 7,000.
“For two thirds of the year and at the end of the ghost month, the PSEi remained just below 7,000. Evolving geopolitical downside risks should add additional short-term friction on top of supply pressures,” the report said. “In the long run, however, lower interest rates mean cash returns come back to earth, and eventually the excess money should find its way back into stocks.” — Revin Mikhael D. Ochave