Shares to move sideways ahead of inflation data

PHILIPPINE STOCKS may move sideways this week ahead of the release of June inflation data, which may continue to dampen investor sentiment.

The benchmark Philippine Stock Exchange index (PSEi) inched up by 9.92 points or 0.16% to close at 6,165.35 on Friday, while the broader all shares index improved by 3.89 points or 0.11% to 3,340.12.

Week on week, the PSEi declined by 52.21 points from its close of 6,217.56 on June 24.

China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said the PSEi’s one-day reversal on Friday despite the substantial sell-off on Thursday underscores investors’ continuing risk aversion as growth concerns mount.

“Furthermore, we continue to view rallies as a temporary reprieve in selling pressure over the near term… For [this] week, investors will likely focus on the release of the June inflation data on Tuesday,” Mr. Mercado said.

“The market has already declined for four consecutive weeks with a total loss of 8.54%. Thus, episodes of bargain hunting could be seen in [this] week’s trading. Still, the market could move with a bearish bias due to the lingering downside risks to the local economy,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Investors are expected to look towards the upcoming June inflation data. An inflation print significantly faster than May’s 5.4% could lead to more selling pressures in the market,” Mr. Tantiangco said.

He added that the peso’s poor performance last week also weighed on market sentiment, and a continued depreciation could continue to affect Philippine stocks.

“Aside from these, the market may also take cues from our upcoming labor market figures. Finally, worries over the global economy amid the monetary tightening of the Federal Reserve and rising commodity prices caused by the Russia-Ukraine war may continue to dampen sentiment,” Mr. Tantiangco said.

The Philippine Statistics Authority will release its June consumer price index report on Tuesday, July 5.

A BusinessWorld poll of 16 analysts last week yielded a median estimate of 6% for June inflation, within the 5.7-6.5% forecast given by the Bangko Sentral ng Pilipinas (BSP) last week.

If realized, this would be well above the BSP’s 2-4% target and 5% projection for the year.

In May, headline inflation was at 5.4%, fueled by rising food and transport costs.

Meanwhile, the peso closed at P55.09 per dollar on Friday, losing 11.5 centavos from its P54.975 finish on Thursday, based on Bankers Association of the Philippines data.

This was the local unit’s worst showing in more than 16 years or since it closed at P55.26 versus the greenback on Oct. 25, 2005.

Mr. Tantiangco put the PSEi’s support for the week at the 6,100 to 6,150 range and resistance between 6,350 and 6,400.

Meanwhile, China Bank Securities’ Mr. Mercado placed the PSEi’s immediate support between 6,050 and 6,100. — Luisa Maria Jacinta C. Jocson