PSEi may move sideways amid lack of leads

PHILIPPINE stocks are expected to move sideways this week as investors await leads amid worries of a possible recession in the United States and more rate increases by the US Federal Reserve.

The benchmark Philippine Stock Exchange index (PSEi) gained 0.51% or 33.04 points to close at 6,481.91 on Friday, “as investors cheered more signs of cooling inflation in the US,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

The broader all-share index went up by 0.41% or 14.25 points to 3,480.77. Week on week, the PSEi shed 0.1% or 6.6 points.

US inflation picked up to 5% in March — slowest in almost two years — from 6% a month earlier, according to the Bureau of Labor Statistics.

Stocks would probably move sideways this week in the absence of fresh leads, Jovis L. Vistan, vice-president at AB Capital Securities, Inc., said in a Viber message at the weekend.

“The market will continue to move on the same narrative of high inflation, interest rates, and US recession concerns,” he said. “This will keep buyers at bay.”

Stocks would likely trade narrowly “as market participants continue to take cues from developments in the US,” Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc. said in a Viber message.

Concerns of a possible recession resurfaced after minutes from the US Fed’s March policy meeting showed that several members of the Federal Open Market Committee were worried about the failure of two regional banks.

They said a “mild recession” might be possible, with a recovery in 2024-2025.

Mr. Arce said Fed officials had cited the need for further rate increases to curb inflation.

“The hawkish remarks are likely to push investors to increase their bets on further Fed monetary policy tightening ahead, just as data showed signs the US economy is slowing but not fast enough to stop the Federal Reserve from raising interest rates again in May,” he added.

The Fed raised key interest rates by a quarter of a percentage point last month to 4.75%-5%. It has raised rates by 475 basis points since March 2022.

The next Fed meeting is on May 2-3.

Overseas remittance data due on Monday could “show some residual uptick given the favorable exchange rate, but these are likely to be offset by the higher costs of living in both the host and recipient countries,” Mr. Arce said.

He placed the PSEi’s support at as high as 6,394 and resistance at as high as 6,645. Mr. Vistan put support at 6,439 and resistance at 6,640 points.– By Adrian H. Halili