By Revin Mikhael D. Ochave, Reporter

PHILIPPINE SHARES are expected to decline this week as investors continue to absorb news on the country’s inflation rate and the upcoming release of other economic data.

The 30-member Philippine Stock Exchange index (PSEi) ended Friday’s trading at 7,134.56, lower by 59.57 points or 0.82% than the previous session.

Week on week, the main index rose 343.1 points or 5.05%, improving from the downward trend it logged in the previous trading week.

The market’s average value turnover dropped 40.76% to P9.73 billion, while net foreign selling eased 62.29% to P590 million.

“Optimism sprang anew from encouraging reports of vaccine availability next year, prodding the bulls to regain some buying momentum,” online brokerage said in a market note.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said he sees a downward trend for the local market in the upcoming trading week following faster-than-expected inflation in November.

“Investors are expected to look towards the upcoming economic data including our September foreign direct investments and October foreign trade for further clues on our economic condition,” Mr. Tantiangco said in a mobile phone message. “Our data are still conveying a challenged local economy as the recent typhoons aggravate our pandemic stricken situation.”

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said market movement may vary as investors will examine the latest inflation figure.

“Investors will be assessing whether the inflation was just because of (recent) typhoons and whether the Bangko Sentral ng Pilipinas (BSP) will continue cutting rates aggressively moving forward,” Mr. Limlingan said in a mobile phone message.

“Eyes will be on the December 17 meeting of the BSP’s Monetary Board. Another rate cut of the same degree will put policy rates below 2%,” said. “Not only will lower rates shore us business confidence as capital costs get reduced, the effect will be twofold for equities as this increases the appeal to switch from fixed income securities.”

Inflation quickened to a 21-month high of 3.3% last month from 2.5% in October and 1.3% in the same month last year amid faster upticks in the prices of heavily weighted food and non-alcoholic beverage items, data released on Friday showed.

Inflation has averaged 2.5% so far this year, still within the BSP’s 2-4% target and the government’s updated 2.4-2.6% projection this year. However, this is higher than the central bank’s forecast of 2.4%. said the market’s immediate support will be at 7,000 and resistance will range from 7,200 to 7,350.

“As we march on to the final weeks of the year, we may have to observe if investors are willing to hold the critical support at 7,000,” Timson Securities, Inc. Head of Online Trading and Trader Darren Blaine T. Pangan said.