PHILIPPINE April inflation that exceeds 4% could hurt market sentiment, but a pickup in economic growth from 5.5% in the fourth quarter of last year could spur optimism, analysts said.

“Investors are expected to watch out first for our April inflation report,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message last week.

“An inflation print exceeding the upper end of the government’s 2-4% target may cause negative sentiment. A first quarter gross domestic product (GDP) growth above 5.6% may spur optimism, while one that falls below that could weigh on the bourse,” he added.

The local statistics agency will release April inflation and first-quarter GDP data on May 7 and 9. Inflation quickened to 3.7% in March from 3.4% in February.

On Friday, the benchmark Philippine Stock Exchange index (PSEi) fell by 0.46% or 31 points to close at 6,615.55. The broader all-share index shed 0.18% or 6.41 points to 3,498.17.

The PSEi dropped by 0.2% or 13.2 points from a week earlier.

“An expected nonmove from the US Federal Reserve barely moved the bellwether index to action, as locals look ahead to April inflation next week,” online brokerage said in a market note.

Mr. Tantiangco said the market might also resort to bargain-hunting ahead of the data release.

“At its current level, the market is trading at a price-earnings ratio of 13.2x, below its 2019-2023 average of 18.2x,” he said. “This shows that the market is at attractive levels. Given this, we may see episodes of bargain-hunting next week.”

He placed market support at 6,400 points and resistance at 6,700.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., put immediate support at 6,360 and resistance at 6,800 to 6,820.

“The PSEi corrected lower for the third consecutive trading day [on Friday] ahead of the local inflation and GDP data [this] week as potential local market catalysts, after local market sentiment was partly weighed by China’s water cannon attack on some Philippine ships in disputed waters,” he said in a Viber message. placed the market’s immediate support at 6,400 to 6,500 and resistance at 6,750.

“Index movement has been capped by intraday selling pressure, keeping rallies short and the overall trend generally unexciting,” it said. “Positive gaps in the chart open up opportunities for range-trading and modest gains in the very short term. A deluge of analyst briefings and corporate guidance in the coming week may help rouse animal spirits.” — Revin Mikhael D. Ochave