Rate hike to weigh on stocks

MANILA, Philippines — The Philippine stock market fell by 0.97 percent week-on-week to close at 6,259 last Friday, dragged by the higher-than-expected inflation in September which came in at 6.1 percent or higher than the August print of 5.3 percent.

This was also higher than the Bangko Sentral ng Pilipinas estimate of between 5.3 to 6.1 percent for the month.

Most sectors fell as well, led by financials and holdings, data from the Philippine Stock Exchange (PSE) showed.

Not surprisingly, total value turnover declined to P4.76 billion on average, which was lower by 65.36 percent week-on-week. Net foreign selling, meanwhile, eased to an average of P516 million, down by 75.03 percent week-on-week.

In a commentary, 2TradeAsia said the higher inflation in September was expected given the weather-related disturbances, more erratic peso demand pull, and the minimum wage impact, among others.

Against this backdrop, 2TradeAsia said monetary authorities may raise rates again when they meet in November.

“As this print marks the second consecutive monthly increase, another 25-basis-point rate hike is more than likely going to be implemented to stifle any trend that may be forming going into 2024,” 2TradeAsia said.

On the other hand, it noted that US inflation has decelerated the most in September. RBC Financial Group sees US inflation slowing to 3.5 percent in September from 3.7 percent in August. US employment, meanwhile, increased the most in eight months in September as the economy created 119,000 more jobs than previously reported in July and August.

In all, 2TradeAsia sees immediate support at 6,150, with resistance at 6,400.

As for tradinhg stimulants, 2TradeAsia said as the market prepares for the target launch of short-selling on Oct. 23, it comes at a low time for the market with “odds stacked against equities, at least from a broader market perspective.”

At the same time, it said short-selling may lead to more efficient price discovery in the near-term.