Stocks may move sideways before US CPI data
PHILIPPINE SHARES are expected to move sideways this week before the release of US inflation data, which could affect the US Federal Reserve’s next move.
The Philippine Stock Exchange index (PSEi) gained 39.87 points or 0.64% to end at 6,222.94 on Friday, while the broader all shares index went up by 13.24 points or 0.39% to 3,360.23.
Week on week, the PSEi rose by 41.88 points or 0.68% from its close of 6,181.06 on Sept. 1.
For this week, analysts said the PSEi may move within a tight range ahead of the release of US consumer inflation data on Sept. 13.
“This week, we could see the index continue its rangebound pattern within the 6,150 to 6,350 area, with investors taking a more cautious stance ahead of the release of US August inflation data,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
“A higher-than-expected rise in US consumer prices would be unwelcome news for equities market as it would pile pressure on the Federal Reserve to raise interest rates and prolong a hawkish monetary policy,” he added.
Faster US consumer inflation could affect trading activity, China Bank Securities Corp. Research Director Rastine Mackie D. Mercado likewise said in an e-mail on Friday.
“We may see muted buying appetite this week should the US inflation print come in faster than expected, and as investors adopt a cautious stance ahead of the Fed’s policy meeting on Sept. 19-20,” Mr. Mercado said.
The US consumer price index (CPI) rose 0.2% in July, matching June’s gain, Labor department data showed. On an annual basis, the CPI advanced by 3.2%.
US Federal Reserve Chair Jerome H. Powell said in the annual Jackson Hole Economic Policy Symposium last month that the central bank may need to raise interests further to cool still-too-high inflation, Reuters reported.
The Fed raised interest rates by 25 basis points (bps) in July, bringing its benchmark overnight rate to 5.25-5.5%.
The US central bank has hiked borrowing costs by a total of 525 bps since it started tightening cycle in March 2022.
Another trading driver for this week is the FTSE rebalancing on Friday, Sept. 15, Mr. Colet said.
“What investors are eagerly awaiting is a significant catalyst that can boost trading activity in the market. Nonetheless, we are closely watching the dollar’s resurgence, spurred by recent developments in the United States,” Globalinks Securities and Stocks, Inc. Senior Trader Mark V. Santarina said in a Viber message.
The US dollar index registered an eighth straight week of gains on Friday while global stock indexes ended slightly higher on the day ahead of key US inflation data this week, Reuters reported.
For this week, Mr. Mercado placed the PSEi’s support at 6,150. — S.J. Talavera with Reuters
