LOCAL STOCKS are expected to move sideways on Friday on tepid market activity as investors wait for the release of November US inflation data and the US Federal Reserve’s policy meeting next week, where they are expected to hike rates anew.

The 30-member Philippine Stock Exchange index (PSEi) lost 149.22 points or 2.23% to close at 6,525.16 on Wednesday, while the broader all shares index decreased by 51.86 points or 1.49% to end at 3,425.86.

Philippine financial markets were closed on Thursday in observance of the Feast of the Immaculate Conception of Mary.

The PSEi had closed lower on Monday due to profit-taking before rebounding on Tuesday. However, it declined anew on Wednesday.

“The market closed at 6,525 on Wednesday after a very rocky week start ahead of the holiday,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message.

He said positive news that drove the market’s rally on Tuesday, which included China’s easing of coronavirus disease 2019 (COVID-19) restrictions.

Beijing last week relaxed its zero-COVID policy, with rules now allowing infected people with mild symptoms to quarantine at home and dropping testing for people travelling domestically.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said the downward trend in the market in two of the last three trading sessions was caused by worries over the Fed’s next move.

The Fed will hold its last policy review for this year on Dec. 13-14, where markets expect a smaller rate hike following four consecutive 75-basis-point (bp) increases. It has raised borrowing costs by 375 bps since March.

“On Wednesday though, there was evident profit taking at close given the holiday,” Mr. Limlingan said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the PSEi has so far corrected lower by 3.8% for the month of December.

This is after a 10.2% increase in November, which was the biggest monthly gain in more than 12 months or since September 2010.

“From the immediate low of 5,699.30 posted on Oct. 3, the PSEi still gained by a total of 825.86 points or 14.5%,” Mr. Ricafort said in a Viber message.

For Friday, Mr. Temporal said investors’ focus will shift to US consumer price index (CPI) data to be released on Dec. 12, which is expected to be a key consideration in the Fed’s upcoming meeting.

“Upward movement for the market could be restrained by these uncertainties but sustained appreciation of peso is likely to keep it afloat,” he said.

“Local stocks’ performance on Friday will depend on the US’ performance Thursday night,” Mr. Limlingan said.

Mr. Temporal said he expects market activity on Friday to remain anemic and placed the PSEi’s support at 6,400 and resistance at 6,700. — J.I.D. Tabile