PHILIPPINE SHARES may trade sideways this week as a weaker peso and rising oil prices drag sentiment, with the market looking ahead to key US data that could affect the US Federal Reserve’s policy stance.
On Friday, the Philippine Stock Exchange index (PSEi) rose by 0.35% or 21.18 points to close at 6,090.60, while the broader all shares index increased by 0.23% or 7.63 points to end at 3,377.44.
Week on week, the index went up by 134.27 points from Aug. 28’s finish of 5,956.33.
“The local market closed out [last] week on a positive note, as easing bets for a September Fed rate hike lifted sentiment across the region… Investors also digested in-line inflation data, with August inflation easing slightly to 6.1% from 6.2% in July, broadly in line with economists’ expectations,” COL Financial Group Research Analyst Denise Joaquin said in a Viber message.
“The local market managed to get back above the 6,000 level last week on the back of bargain hunting. However, overall investor confidence remains low as reflected on the tepid value turnover,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.
For this week, the local bourse could remain under pressure as weak investor sentiment, a depreciating peso, elevated yields, and rising oil prices weigh on the outlook, he said.
“The economic outlook remains challenged. The chart remains bearish. Signs show that in the near term, the local market could still move with a downward bias.”
Renewed tensions between the United States and Iran, which have pushed Brent crude prices back above $90 per barrel, are expected to push oil domestic fuel prices, adding to inflation pressures, he said.
“Rising global oil prices, the depreciating peso, and agricultural supply threats brought by El Niño — all pose upside risks to commodity prices, which in turn may cause inflation to reverse its trend. This in turn would pose downside risks to our economic growth in the second half.”
He said the market remains on a downward trend based on technical indicators.
“Currently, the market’s trading range is seen from 6,000 to 6,150. It is trading below its 10-day, 50-day, and 200-day exponential moving averages, reflecting bearishness,” Mr. Tantiangco added.
“For the upcoming trading week, the market could remain sideways as investors remain cautious and monitor movements in the peso and global Treasury yields,” Ms. Joaquin likewise said.
The market is expected local economic data on labor and foreign direct investments due out this week, while a key release would be US inflation data that could affect the Fed’s policy decision this month, she added.
Just after the latest US jobs report, short-term interest rate futures implied about a 65% chance for a hike at the Fed’s September meeting, up from about 55% before the report, Reuters reported. By New York afternoon trade, that was back down to 57%. — Alexandria Grace C. Magno
