Stocks may face selling pressure before CPI data

Philippine shares may succumb to selling pressure in the coming days after their strong run in the past six weeks, with February inflation data and corporate results seen to be major trading drivers, analysts said.

On Friday, the Philippine Stock Exchange index (PSEi) declined by 0.36% or 25.12 points to end at 6,919.59. Meanwhile, the broader all shares index climbed by 0.15 point to close at 3,609.21.

Week on week, the PSEi rose by 0.09% or 6.38 points from its 6,913.21 close on Feb. 23.

“The local market is already on a six-week gaining streak. However, last week’s gains have been thin at 0.09%, implying that selling pressures are close to taking over,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“The market tested and failed to hold ground above the 7,000 level, implying that it may not be prepared yet to take the said resistance,” he added.

For this week, investors could take cues from the release of February inflation data on Tuesday and January labor data on Friday, Mr. Tantiangco said.

“An inflation print significantly higher than January’s 2.8% may cause a pullback for the local market. Investors may also watch out for our upcoming labor market data as this would give clues on the health of the general economy,” he said.

Headline inflation could have picked up in February after hitting an over three-year low in January, as prices of key food items, fuel, and electricity rose, the central bank said on Thursday.

Inflation may have settled within the 2.8-3.6% range in February, the Bangko Sentral ng Pilipinas (BSP) said in a statement.

The lower end of the forecast would be unchanged from the January print, which was the slowest since October 2020. Meanwhile, a faster rate would mark the first time since September 2023 that the consumer price index (CPI) saw a month-on-month uptick.

Still, February inflation would be lower than the 8.6% print recorded a year ago. It would mark the third straight month that the CPI was within the BSP’s 2-4% target range.

“Finally, investors are expected to continue monitoring 2023 corporate results. Whilst mixed, more of the results that have been released so far have shown better 2023 bottom lines compared to the preceding year. If this trend continues, then it may help in sustaining the positive sentiment in the market,” Mr. Tantiangco added.

He placed the PSEi’s major support at 6,700 and major resistance at 7,000.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort put the PSEi’s next resistance at 7,005.30, which was its intraday high on March 1.

“Any sustained breach above 6,900 levels could lead to further upside potential towards the 7,000 levels in the coming weeks,” he said.

“Immediate minor support levels range from 6,590-6,750. Immediate major support is at the 6,330-6,460 levels, which will help keep intact the underlying upward trend over the past four months,” he added. — R.M.D. Ochave