Shares may rise on dovish BSP bets after CPI data

LOCAL STOCKS may rise this week as the market expects the Bangko Sentral ng Pilipinas (BSP) to put its rate hikes on hold after inflation slowed further last month.

The Philippine Stock Exchange index (PSEi) went up by 1.31 points or 0.02% to close at 6,685.66 on Friday, while the broader all shares index increased by 2.42 points or 0.06% to 3,556.06.

Week on week, the PSEi rose by 60.58 points or 0.91% from its close of 6,625.08 on April 28.

“The local bourse inched up by 1.31 points to 6,685.66 following the easing of inflation rate to 6.6% in April. The market’s gain [was trimmed at] the last minute as investors booked some gains to avoid any uncertainties over the weekend,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

Headline inflation eased to 6.6% in April, the slowest in eight months or since the 6.3% print in August 2022, preliminary data released by the Philippine Statistics Authority (PSA) on Friday showed.

This was likewise below the 7.6% print in March and the 7% median estimate in a BusinessWorld poll and was within the BSP’s 6.3-7.1% forecast for the month.

For the first four months, the consumer price index (CPI) averaged 7.9%, well above the BSP’s 2-4% target and 6% forecast for the year.

“The steep decline of our inflation rate to 6.6% last April is expected to raise expectations that the Bangko Sentral ng Pilipinas will pause with its monetary tightening in its May 18 meeting,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“This in turn is seen to help the market climb. Adding to this is the sustained optimistic anticipation of first quarter corporate results,” Mr. Tantiangco added.

BSP Governor Felipe M. Medalla last month said the Monetary Board could consider holding rates steady at their meeting this month if the CPI eased further in April.

The BSP has raised benchmark interest rates by 425 basis points since May 2022 to help bring down elevated inflation, with its policy rate now at a 16-year high of 6.25%.

China Bank Securities, Inc. Research Associate Lance Gabriel U. Soledad said shares may pick up due to profit taking as investors await the release of key economic data.

“While we could still see momentum continuing [this] week — possibly leading to prices rallying towards the 6,720 resistance — we think this will also be accompanied by increasing selling pressure as some investors may take profit and reduce market exposures ahead of key data releases,” Mr. Soledad said in a Viber message.

“[This] week, investors may also take cues from our upcoming March labor force survey and first quarter [gross domestic product] data,” Philstocks Financial’s Mr. Tantiangco added.

The PSA will release the results of its March Labor Force Survey on May 8 and first-quarter GDP data on May 11.

For this week, China Bank Securities’ Mr. Soledad placed the PSEi’s support at 6,720 and resistance at 6,600. — By AHH