PHILIPPINE STOCKS may move sideways this week on cautious trading as investors await the Bangko Sentral ng Pilipinas’ (BSP) policy decision on Thursday and the release of more firms’ financial reports.

The benchmark Philippine Stock Exchange index (PSEi) went up by 34 points or 0.49% to close at 6,876.79 on Friday, while the broader all shares index added 9.67 points or 0.26% to end at 3,653.17

Week on week, however, the PSEi went down by 150.59 points or 2.14% from 7,027.38 on Feb. 3.

“Bears took the reins amid the higher-than-expected inflation print for the month of January,” online brokerage said in a market note.

Headline inflation accelerated to a new 14-year high of 8.7% in January, faster than the 8.1% print in December 2022 and 3% in the same month last year.

This was also higher than the 7.5% to 8.3% forecast range given by the central bank for the month, and marked the 10th consecutive month that inflation was above the BSP’s 2-4% target for the year.

For this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco expects investors to trade cautiously ahead of the central bank’s policy meeting on Feb. 16.

“The possibility of a 50-basis-point (bp) rate hike is expected to be priced in, following the Philippines’ strong January inflation data. This in turn could weigh on the local bourse,” Mr. Tantiangco said.

The central bank could raise benchmark rates by 50 bps at its meeting on Thursday to rein in elevated inflation, analysts said.

A BusinessWorld poll last week showed 17 out of 18 analysts see the Monetary Board hiking borrowing costs at its first meeting of the year. Nine see a 50-bp hike, while eight expect a 25-bp increase.

BSP Governor Felipe M. Medalla earlier said the central bank could hike borrowing costs by 25 or 50 bps at their policy meeting on Feb. 16 as they need to anchor inflation expectations.

“Investors may also look towards our upcoming OFW (overseas Filipino workers) remittances data for clues on the local economy,” Mr. Tantiangco added.

Remittances data are expected to be released by the central bank on Feb. 15, Wednesday.

“Over a few weeks of grappling with macro drivers, particularly following inflation and interest rate movements, markets are looking to find direction from earnings reports for fourth quarter,” said.

Listed companies are expected to continue releasing their 2022 financial reports in the coming weeks.

Mr. Tantiangco placed the PSEi’s support at 6,800 and immediate resistance at its 20-day exponential moving average, while put support at 6,700 and resistance at 7,000. — Justine Irish D. Tabile