PSEi to move sideways before key data release

PHILIPPINE STOCKS may move sideways this week as the market awaits the release of June inflation report and other economic data.

The Philippine Stock Exchange index (PSEi) declined by 43.42 points or 0.66% to 6,468.07 on Friday, while the broader all shares index went down by 12.93 points or 0.37% to close at 3,452.96.

Week on week, the PSEi rose by 74.52 points or 1.17% from its close of 6,393.55 on June 23.

“Philippine shares ended the semester just below the 6,500 level… Here at home, the main focus was on window dressing with the first of the year drawing to a close, on the back of a narrower May budget deficit,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan in a Viber message.

“The local market managed to bounce back last week as bargain hunters took advantage of the preceding week’s decline. This in turn has brought it back to its 6,400-6,600 range,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

For this week, investors expect local shares to move sideways ahead of the release of local economic data.

“[This] week, the local market’s movement may depend on the upcoming economic data. Investors may take cues from the upcoming June S&P Global Philippines Manufacturing PMI (purchasing managers’ index) and the May labor force survey for clues on the strength of the local economy,” Mr. Tantiangco said.

“Strong figures may boost sentiment, which in turn could bring the market higher. Investors are also expected to watch out for the Philippines’ June inflation rate. A further slowdown from May’s 6.1% may also spur optimism [this] week,” he added.

The Philippine Statistics Authority will release June inflation data on Wednesday, July 5.

A BusinessWorld poll of 17 analysts yielded a median estimate of 5.5% for June inflation, near the lower end of the central bank’s forecast range of 5.3% to 6.1% for the month.

If realized, this would be slower than the 6.1% in May and will be the fifth consecutive month of easing inflation.

Still, June would mark the 15^th straight month that inflation surpassed the Bangko Sentral ng Pilipinas’ 2-4% target for the year.

“In terms of fundamentals, investors will be digesting a number of economic data releases this week, with the Philippine June inflation print being the most keenly awaited for signs of a sustained relief in consumer prices,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet likewise said in a Viber message.

“A large decline in local inflation, especially one that overshoots median expectations, could spur bullish trades” Mr. Colet added.

For this week, Philstocks Financial’s Mr. Tantiangco placed the PSEi’s support at 6,400 and resistance at 6,600. — A.H. Halili