PH shares may move sideways after US jobs data

Philippine shares could trade sideways during this shortened trading week as investors could hunt for bargains and as the latest US jobs data affected the outlook for US Federal Reserve rate cuts.

On Friday, the bellwether Philippine Stock Exchange index (PSEi) rose by 0.13% or 8.90 points to end at 6,518.76, while the broader all shares index gained by 0.06% or 2.14 points to close at 3,491.93.

Week on week, the PSEi increased by 1.33% or 85.66 points from its 6,433.10 close on May 31.

“The local market was able to bounce back last week as investors digested our May inflation figure, which remained within the government’s target range. However, trading has been tepid, implying that many are still on the sidelines amid market uncertainties,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

Headline inflation picked up for a fourth straight month to 3.9% in May from 3.8% in April, the Philippine Statistics Authority reported on Wednesday. This was a tad lower than the 4% median estimate in a BusinessWorld poll of 16 analysts and was within the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target.

For this week, the market could move sideways, Mr. Tantiangco said.

“The local market is still seen to be at attractive levels. Hence, we may still see some bargain hunting moving forward. However, downside risks remain, which are seen to make it challenging for the market to sustain momentum,” he said.

“The end of El Niño is seen as a positive development for our inflation picture as pressures on our food supply and demand for electricity are expected to ease. This in turn is seen to help the market. However, the stronger-than-expected May jobs report in the US, which dents the hopes of a rate cut by the Fed soon, may weigh on sentiment,” Mr. Tantiangco added.

The US jobs data released on Friday could “weigh on stock prices if the market assumes that the BSP will not cut ahead of the Fed, or further weaken the peso if calls for the BSP to cut ahead of the Fed strengthens,” AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message. “In any case, it will likely be a rough week ahead and we might find the index back below the 6,500 level or the peso weakening above P59 per dollar.”

The US economy created far more jobs than expected in May and annual wage growth reaccelerated, underscoring the resilience of the labor market and reducing the likelihood the Federal Reserve will be able to start rate cuts in September, Reuters reported.

Nonfarm payrolls increased by 272,000 jobs last month, the Labor department’s Bureau of Labor Statistics said.

Mr. Tantiangco placed the market’s support at 6,400 and resistance at 6,700 for this week.

Meanwhile, 2TradeAsia.com put the PSEi’s immediate support at 6,350 and resistance at 6,600.

Philippine financial markets are closed on June 12, Wednesday, for Independence Day. — R.M.D. Ochave with Reuters