TRADING at the stock market could be weak in the coming days amid concerns over possible tightening by the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

The benchmark Philippine Stock Exchange index (PSEi) went up by 3.28 points or 0.05% to close at 6,266.34 on Friday, while the broader all shares index added 1.16 points or 0.03% to end at 3,384.57.

Week on week, the PSEi inched up by 6.39 points or 0.1% from its close of 6,259.95 on Oct. 6.

“[Last] week’s relative resiliency leads us to believe that the market may stage a rally in the coming week, especially as key risk-off events have already passed,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail. 

Bargain-hunting could continue and cause the market to move sideways, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“However, we may not yet see a strong rally amid lingering worries. Concerns over a possible resumption of the Federal Reserve and the BSP’s monetary tightening amid the inflation picture at home and in the US may weigh on sentiment,” Mr. Tantiangco said.

BSP Governor Eli M. Remolona, Jr. last week said the Monetary Board is open to hiking borrowing costs by 25 basis points (bps) in their Nov. 16 review following the release of data showing faster-than-expected September inflation.

Headline inflation accelerated for a second straight month to 6.1% in September from 5.3% in August. This brought the nine-month inflation average to 6.6%, still higher than the BSP’s 5.8% forecast and 2-4% target.

The Monetary Board has kept the benchmark interest rate at 6.25% for four straight meetings after it hiked borrowing costs by 425 bps from May 2022 to March 2023 to help tame inflation.

Meanwhile, US consumer prices increased in September amid a surprise surge in rental costs, but a steady moderation in underlying inflation pressures supported financial market expectations that the Federal Reserve would not raise interest rates next month, Reuters reported.

The consumer price index (CPI) increased 0.4% last month. The CPI soared 0.6% in August, which was the largest gain in 14 months.

In the 12 months through September, the CPI advanced 3.7% after rising by the same margin in August.

The analysts said investors are expected to monitor the release of the August cash remittances data on Monday and balance of payments data on Thursday.

“Investors will also keep an eye on the intensifying Israel-Hamas war, as any expansion of the conflict could impact oil prices. In addition, market participants will keep track of movements in US bond yields given the growing influence of this data point on how the Federal Reserve thinks about policy rates,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet added in a Viber message.

For this week, he placed the PSEi’s support and resistance between 6,150 and 6,420. — SJT with Reuters