PSEi may go up on peso’s rise, investor optimism

Philippine shares may climb further this week, with the peso gaining strength versus the dollar and an improving economic outlook.

The Philippine Stock Exchange index (PSEi) rose by 20.41 points or 0.33% to 6,211.89 on Friday, while the broader all shares index climbed by 10.28 points or 0.31% to 3,324.77.

Week on week, the PSEi went up by 50 points or 0.81% from its finish of 6,161.89 on Nov. 10.

“The local market had a good run last week, supported primarily by the slowdown in the US’ October inflation and the anticipated pause in the BSP’s (Bangko Sentral ng Pilipinas) monetary tightening. In the process, the market was able to get past its 10-day, 20-day, and 50-day exponential moving averages,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

US consumer prices were unchanged in October as Americans paid less for gasoline, and the annual rise in underlying inflation was the smallest in two years, bolstering the view that the US Federal Reserve was probably done raising interest rates, Reuters reported.

The unchanged reading in the consumer price index (CPI), the first in more than a year, followed a 0.4% rise in September.

In the 12 months through October, the CPI climbed 3.2% after rising 3.7% in September.

Meanwhile, a separate report from the Labor department’s Bureau of Labor Statistics on Wednesday showed the producer price index (PPI) for final demand declined 0.5% in October, the largest decrease since April 2020. The PPI rose 0.4% in September.

In the 12 months through October, the PPI increased 1.3% after rising 2.2% in September.

On the other hand, the BSP on Thursday kept its policy rate steady at 6.5%, as expected by 15 of 18 analysts in a BusinessWorld poll. Interest rates on the central bank’s overnight deposit and lending facilities were also maintained at 6% and 7%, respectively.

For this week, the market could get a boost from the peso’s rise against the greenback, Mr. Tantiangco said.

“The local currency has been strengthening against the United States dollar while oil prices in the global market have been downwardly biased. Sustaining these positive developments may help the local market in next week’s trading,” he said.

On Friday, the peso rose by 12 centavos to PHP 55.67 per dollar from to PHP 55.79 on Thursday, based on Bankers Association of the Philippines data. Week on week, the local unit climbed by 29 centavos from its PHP 55.96 finish on Nov. 10.

For its part, online brokerage 2TradeAsia.com sees the PSEi’s immediate support at 6,000-6,100 and resistance is at 6,300-6,400. 

“Economic indicators are stabilizing, corporate fundamentals are showing resilience — this partly needs much more market volume for enough critical mass to get past the current trading band,” 2TradeAsia.com said in a report. — RMDO with Reuters