Shares may move sideways on bargain hunting

Philipine stocks may move sideways this week amid bargain hunting as investors await the US Federal Reserve’s monetary policy ruling.

“Local equities remained mostly listless last week, as positive inflation headlines failed to deliver any strong upward momentum for the local market,” online brokerage 2TradeAsia.com said in a note.

The benchmark Philippine Stock Exchange index (PSEi) fell by 0.49% or 32.21 points to close at 6,507.15 on Friday. The broader all-share index slid by 0.24% or 8.53 points to end at 3,476.18.

The PSEi slid by 0.07% or 4.86 points from a week earlier.

Inflation eased to 6.1% in May from 6.6% in April, the slowest in a year. It has averaged 7.5% for the first five months, still above the Bangko Sentral ng Pilipinas’ 2-4% target and 5.5% forecast for the year.

Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial, Inc. expects bargain hunting this week due to recent weekly declines and attractive levels.

“Investors are also expected to look toward the Federal Reserve’s policy meeting,” he said in a Viber message. “A further rise in their policy rate is seen to weigh on the market, while a pause in tightening may boost sentiment. For cues on the Federal Reserve’s move, investors are also expected to watch out for the US’ upcoming May inflation report.”

The US news might largely influence this week’s stock price movements, particularly May inflation data and the Federal Reserve’s policy rate decision, said Juan Paolo E. Colet, managing director at China Bank Capital Corp.

“Many analysts expect a US rate hike pause this month, but it is the Fed’s interest rate outlook that will be most keenly watched,” he said. “Any hawkishness will weigh down on our market, so traders are hoping for a dovish tone.”

The US Fed raised it benchmark overnight interest rates by 25 basis points (bps) at its policy meeting last month.

The US central bank has raised fund rates to 5%-5.25%. It has increased rates by 500 bps since March 2022. Its next policy meeting is on June 13-14.

“On the domestic front, investors will pay attention to overseas Filipino workers’ personal remittance data for April,” Mr. Colet said. “Given the large contribution of such flows to our economy, a slowdown will weigh on market sentiment.”

Mr. Colet and Mr. Tantiangco placed the PSEi’s immediate support at 6,400 and resistance at 6,600 points this week. 2TradeAsia.com put support at 6,450 and resistance at 6,650 to 6,700.  — Adrian H. Halili