Shares to remain volatile on rising inflation risks
STOCKS are seen to remain volatile this week amid the Russia-Ukraine crisis, which will continue to affect commodity prices and cause inflation pressures.
The benchmark Philippine Stock Exchange index (PSEi) went up by 42.23 points or 0.59% to close at 7,124.84 on Friday, while the broader all shares gained by 15.24 points or 0.40% to 3,774,59.
Week on week, the PSEi gained 207.21 points from its finish of 7,007.63 on March 18.
“Philippine shares continued to claw their way up as jobless claims dropped to over a decade low of 187,000, pointing that the economic recovery of the US could keep growing through headwinds like the Ukraine-Russia war and higher interest rates,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
The US Labor Department said initial jobless claims fell to 187,000 from 28,000, the lowest level since 1969, pointing to rapidly diminishing labor market slack that will keep boosting wage inflation, Reuters reported.
Claims have been declining in part as coronavirus disease 2019 (COVID-19) restrictions across the country have been lifted amid a massive drop in coronavirus cases. They plunged from a record high of 6.149 million in early April 2020.
“Back home, the Bangko Sentral ng Pilipinas (BSP) kept the key policy rate steady at a record low of 2% for an eleventh consecutive meeting yesterday, as expected. As per BSP Chief Benjamin E. Diokno, the central bank remains vigilant over possible implications of the dragging Ukraine war on the local economy. He also noted that the regulatory body is ready to take action on potential second-round effects from elevated pressures to inflation,” Mr. Limlingan added.
The central bank kept benchmark interest rates steady for an 11th straight meeting on Thursday, even as it warned that its inflation target might be breached this year amid surging global oil prices due to Russia’s continued invasion of Ukraine.
For this week, the market will continue to monitor the ongoing war between Russia and Ukraine and its impact on commodity prices.
“The market will continue to be volatile dependent upon the Russia-Ukraine war status, Global inflation will continue to dominate the market movements due to the supply constraints of the war,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message.
Rockets struck the western Ukrainian city of Lviv on Saturday, signaling a potential new front in Moscow’s invasion as US President Joseph R. Biden, Jr. decried Russian President Vladimir Putin’s grip on power and sought to steel Europe for a long fight ahead, Reuters reported.
After more than four weeks of fighting, Russia has failed to seize any major Ukrainian city and the conflict has killed thousands of people, sent nearly 3.8 million abroad and driven more than half of Ukraine’s children from their homes, according to the United Nations.
For this week, Mr. Pangan placed the PSEi’s immediate support at 6,950 and resistance at 7,450. — L.M.J.C. Jocson with Reuters
