Market to move within wider range this week

MANILA, Philippines — It was a busy week for the Philippine stock market last week, with the August inflation report coming out higher than expected at 5.3 percent from 4.7 percent in July.

This week, meanwhile, investors will be keeping a close watch on the US August inflation, which is expected to remain hot.

This could see the stock market index continue its range bound 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, said Juan Paolo Colet, managing director at China Bank Capital.

Analysts abroad expect US inflation to have spiked in August; Colet said a higher than expected rise in US consumer prices would be unwelcome news for the equities market.

He said this is because it means there would be greater pressure on the Federal Reserve to raise interest rates and prolong a hawkish monetary policy.

Outside inflation, traders will also anticipate the FTSE rebalancing, which takes effect on Friday, as that could influence the movement of certain local index heavyweights, Colet also said.

Overall, the market remained cautious last week following the higher August inflation print.

While the benchmark Philippine Stock Exchange index inched up by 41 points to 6,222.94 or up 0.68 percent week on week, total value turnover declined to an average of P5.25 billion, down 31.89 percent week on week.

Net foreign selling last week, meanwhile, eased to an average of P719 million, down by 64.59 percent.

For this week, 2TradeAsia sees immediate support at 6,100, resistance 6,300, as it advises stock market investors “to strategize for a long-term hold, especially once the rate cycle tapers off in early 2024.”

Commenting on the overall mood of the market, 2TradeAsia said the state of the global macro environment is what central banks and economic managers are now attempting to balance.

“These real-world concerns translate to downside risks in the short-term, which explain the depression in market prices. We maintain our view that these are not permanent conditions,” it said.