February 4, 2023

Filipino Guardian

Sentinels of Filipino Free Press

PSEi moves sideways ahead of CPI, labor data

REUTERS/Eloisa Lopez

LOCAL SHARES are expected to range within a limited range this week as investors await the release of the November consumer price index (CPI) and labor data.

The leading index of the Philippine Stock Exchange (PSEi) slipped 245.34 points, or 3.64%, to close at 6,489.65 on Friday, while the broader all-shares index fell 81.38 points, or 2.32%, to 3,419.65 .

Week-on-week, the PSEi fell 117.29 points, or 1.78%, from its closing level of 6,606.94 on November 25th.

Online broker 2TradeAsia.com said in a report that the PSEi declined on Friday as investors decided to pocket their gains ahead of a shortened trading week and on optimism after the US Federal Reserve indicated slower rate hikes .

“The Fed’s shift in tone to ‘slowing down’ its aggressive, tightening stance on interest rates sparked a wave of optimism in capital markets,” said 2TradeAsia.com.

Fed Chair Jerome H. Powell said last week it was time to consider smaller rate hikes, but said borrowing costs could remain high for a while in a bid to stem elevated inflation.

The US Federal Reserve has hiked borrowing costs by 375 basis points since March, with the fed funds rate now in the 3.75% to 4% range. The next Fed meeting is scheduled for December 13th and 14th.

“The local stock market indicator, the PSEi, corrected sharply lower for the second day in a row, although it was still viewed as a healthy downgrade or profit-taking after the recent strong gains,” said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp .

For this week, 2TradeAsia.com said investors are awaiting the release of November’s CPI data, which could provide clues on Bangko Sentral ng Pilipinas (BSP)’s next move. The last meeting of the BSP for this year will take place on December 15th.

A BusinessWorld poll of 15 analysts conducted last week gave a median estimate of 7.8% for headline inflation in November. If realized, it would break GNP’s 2-4% target for the eighth straight month.

2TradeAsia.com added that the December 8 holiday commemorating the Feast of the Immaculate Conception of Mary will give the PSEi room for consolidation.

“Finding the right play for 2023 will be at the core of most trades over the next few weeks – watch for potential volume spikes as funds find rationality over this wall of worry,” it said.

“In the coming days, any sustained gains above the immediate key resistance at 6,430 would still help maintain the integrity of the underlying uptrend over the past two months,” added Mr. Ricafort.

He said investors were also pricing in the November jobs survey results and international gross reserves data, which are due to be released on November 7.

Mr. Ricafort placed PSEi’s immediate minor support at 6360-6520 and next resistance at 6600.

Meanwhile, 2TradeAsia.com has indicated PSEi’s immediate support in the 6350-6400 range and resistance at 6800. — Justine Irish D. Tabile