STOCKS could move sideways this week on fears of faster inflation and with the market waiting for more hints from the US central bank on its plan to wind down stimulus measures.

The Philippine Stock Exchange index (PSEi) lost 29.28 points or 0.42% on Friday to close at 6,923.60, while the broader all shares index inched up by 0.67 point or 0.01% to 4,326.51.

Week on week, the benchmark PSEi shaved off 27.93 points from its 6,951.53 finish on Sept. 24.

“[This is] after US stock markets corrected lower recently to the lowest in one to two months, and after NCR’s (National Capital Region) alert level or quarantine restrictions [were] maintained until Oct. 15, thereby tempering or limiting further reopening of the economy,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail on Friday.

The S&P 500 lost 2.2% week on week, while the Nasdaq declined 3.2% and the Dow Jones Industrial Average went down by 1.4%.

Back home, Metro Manila will remain under Alert Level 4 until mid-October, the government said last week. However, restrictions on gyms, restaurants, and some personal care services were eased for those fully vaccinated.

For this week, analysts said leads will include September inflation data, which will be released by the Philippine Statistics Authority on Tuesday, Oct. 5.

“Inflation fears will cap market upside on PSEi’s attempt at breaking above the 7,000 mark,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message on Saturday.

A BusinessWorld poll of 17 analysts yielded a median estimate of 5% for September headline inflation, closer to the upper end of the central bank’s 4.8%-5.6% estimate for the month and above its 2-4% target for the year. If realized, this will be faster than the 4.9% in August as well as the 2.4% a year earlier. It will also be the quickest print since the 5.1% in December 2018.

Analysts said higher food and utility prices as well as base effects likely caused a continued uptrend in inflation last month.

PNB Securities, Inc. President Manuel Antonio G. Lisbona said investors will also monitor the US Federal Reserve.

“The market will be looking closely at any developments relating to stimulus tapering by the US Fed as the factor to take money off the table in the coming sessions. This is on the back of rising and persisting inflation, which has frustrated the US central bank’s claim that it would be transitory,” Mr. Lisbona said in a separate Viber message on Saturday.

“While the Philippines has enough monetary policy space, the market will be affected by global market volatility in the short term,” he added.

“It looks like the market will trade between 6,780 and 6,980 with the midpoint as the initial support area,” Mr. Lisbona said. — K.C.G. Valmonte