By Arra B. Francia, Reporter
STOCKS ARE seen to take their cue from the results of the United States Federal Reserve’s policy meeting on May 2, alongside local April inflation data.
The benchmark Philippine Stock Exchange index (PSEi) continued its upward movement on Monday, jumping 1.27% or 98.23 points to close at 7,819.25.
The index has been up since Thursday, lifted by the revision of debt watcher S&P Global Ratings’ credit outlook on the Philippine economy to positive from stable. Window dressing by some fund managers also helped sustain the market’s rise in the previous session.
While analysts remain cautious of prospects for the index, the three-day rally may indicate a reversal of the slump seen last month.
“For this week, we’re looking at the US Fed policy meeting on May 2 which, as of today, has a 93% probability that they will raise rates by 25 basis points. The Eurozone’s 1st Quarter GDP (gross domestic product) data will also be released this week though analysts are expecting a slower growth for the region in the first 3 months of the year,” Timson Securities, Inc. trader Jervin S. de Celis said in a mobile phone message.
Other investors expect the US Federal Open Market Committee to keep interest rates steady for this policy meeting, instead gunning for a June rate hike.
In the local front, the Philippine Statistics Authority will also be releasing inflation data on May 4. The Bangko Sentral ng Pilipinas’ Department of Economic Research released a 3.9-4.7% forecast for headline inflation last April, taking into account higher rice and oil prices. This is slightly higher than the 3.8-4.6% estimate last March.
The central bank’s forecast range is also well beyond the government’s target of 2-4%.
Meanwhile, a BusinessWorld poll among economists conducted last week resulted in a 4.5% median estimate for April inflation.
“Outside the country, investors will watch out for the typical economic data in the US such as jobless claims, PMI (purchasing managers’ index), and trade balance. Then of course there maybe further developments in the Korea Peninsula that could sustain or break the run-up,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a market note at the start of the week.
Earlier this week, Eagle Equities, Inc. Research Head Christopher John Mangun placed the market’s support level between 7,500 to 7,600, while resistance is around 7,750 to 7,880.
Overnight, the Dow Jones Industrial Average dropped 0.61% or 148.04 points to 24,163.15. The S&P 500 index shed 0.82% or 21.86 points to 2,648.05, while the Nasdaq Composite index dipped 0.75% or 53.53 points to 7,066.27.
Philippine financial markets were closed on Tuesday for Labor Day.