Stocks to move sideways before inflation report

Philippine stocks may continue to move sideways this week as investors await the release of key economic data.

On Wednesday, the bellwether Philippine Stock Exchange index (PSEi) rose by 0.07% or 5.36 points to close at 6,903.53, while the broader all shares index improved by 0.24% or 8.96 points to end at 3,607.51.

Week on week, the PSEi climbed by 0.31% or 21.56 points from its 6,881.97 close on March 22.

“Sideways trades characterized the sessions of this shortened trading week, closing the first quarter on a quiet note,” online brokerage firm 2TradeAsia.com said in a market note last week.

For this week, the market will wait for the release of the March inflation report on Friday, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“For the 1st week of April, investors are expected to look towards upcoming economic data for clues. Primarily, investors are expected to watch out for the Philippines’ March inflation data. An inflation print significantly faster than February’s 3.4% may further temper hopes of monetary easing by the Bangko Sentral ng Pilipinas (BSP), which in turn would negatively affect the local bourse,” he said.

“Investors may also take cues on the local economy’s health from the upcoming March S&P Global Philippines manufacturing purchasing managers’ index,” he added. 

A BusinessWorld poll of 17 analysts yielded a median estimate of 3.8% for March headline inflation. If realized, this would be faster than the 3.4% print in February, but slower than 7.6% in the same month a year ago.

This would also mark the second straight month that inflation picked up on a monthly basis but would be within the BSP’s 2-4% annual target for a fourth straight month.

Investors are also expected to monitor the performance of US markets, Mr. Tantiangco said.

“The record performances from Wall Street, if they continue, are expected to have positive spillovers to the local market. Eyes may also be on the peso, which has been exhibiting weakness against the dollar recently. A continuation of this weakening may weigh on sentiment,” he said.

Mr. Tantiangco put the PSEi’s major support at 6,800 and resistance at 7,000.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort placed the PSEi’s immediate minor support at 6,600-6,760.

“For the coming week, more market players return from the Holy Week holidays and would lead to more trading values and activities that would support the market,” Mr. Ricafort said in a Viber message.

For its part, 2TradeAsia.com put the PSEi’s immediate support at 6,800 and resistance at 7,000.

“The local bourse has been range-bound in the 6,800 to 7,000 zone. It is likely to stay here in the near term, pending strong impetus on the macro side,” the online brokerage said. —  R.M.D. Ochave