Upside bias for stocks this week

MANILA, Philippines — Share prices may continue their climb this week, with investors riding high on the momentum of a slower-than-expected September inflation.

The Philippine Stock Exchange index went up by 0.53 percent week-on-week, closing at a fresh high in more than two years last Friday to 7,467.92.

Last week’s strong finish was driven primarily by a cooler-than-expected September inflation rate of 1.9 percent.

“Looking ahead, we expect the market to range between the 7,400 and 7,500 levels ahead of the next monetary policy meeting on Oct. 16,” Unicapital head of research Wendy Estacio-Cruz said.

“This inflation print should support our view of another policy rate reduction. Unemployment data is also set to be released on Oct. 8,” she said.

Philstocks Financial research manager Japhet Tantiangco, however, said tensions in the Middle East are seen as a downside risk to the market.

He said an escalation of tensions are expected to raise oil prices and cause negative spillovers to the rest of the global economy.

“Hence it is expected to weigh on sentiment,” he said.

On a positive note, Tantiangco said the below-expected inflation print for September is seen boosting market sentiment due to its positive implications on the local economy.

“The low inflation figure could mean stronger household consumption which would benefit our overall economic growth given its significant contribution. The low inflation also strengthens the case for the continuation of the BSP’s (Bangko Sentral ng Pilipinas) monetary policy easing,” he said.

According to Tantiangco, investors will keep an eye on upcoming data such as the labor force survey, foreign trade and foreign investments data for clues on the local economy.

“The market may continue to test the 7,400 level. If it holds its ground at the said line this will be considered as its support while its next resistance is seen at 7,700,” he said.