Stocks to move sideways ahead of US CPI report

PHILIPPINE STOCKS are expected to move sideways this week as investors await the release of US consumer inflation data for February.

The Philippine Stock Exchange index (PSEi) went down by 19.39 points or 0.29% to close at 6,589.88 on Friday, while the broader all shares index declined by 8.80 points or 0.24% to 3,540.39.

Week on week, the PSEi dropped 65.49 points or 0.98% from its close of 6,655.37 on March 3.

“The market was down on growth slowdown fears given declines in quarter-on-quarter earnings for some PSEi companies, slower bank lending, local factory output decelerating and worries over faster US Federal Reserve hikes,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in an e-mail.

Credit growth slowed to 10.4% in January from 13.7% in December, Bangko Sentral ng Pilipinas data showed.

Meanwhile, preliminary results of the Philippine Statistics Authority’s latest Monthly Integrated Survey of Selected Industries showed factory output, as measured by the volume of production index, expanded by 10.6% year on year in January.

This was faster than the revised 4.2% growth seen in December, but lower compared with the 10.9% in January 2022.

On the other hand, Fed Chair Jerome H. Powell told lawmakers last week that the US central bank will likely need to raise interest rates more than expected in response to recent strong data.

For this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said the main index could retest the 6,600 level, with investors likely to take their cue from February US inflation data.

“A strong inflation print, especially one that beats January’s 6.4%, may put downward pressure on both the Philippine peso and the local market as this would point to more rate hikes by the Fed,” Mr. Tantiangco said in a Viber message.

February US consumer price index (CPI) data will be released on March 14. In January, consumer inflation increased 0.5% after gaining 0.1% in December. In the 12 months through January, US January CPI increased to 6.4%.

“After a series of hawkish comments from no less than the Fed’s Powell [last] week, attention will turn to US CPI print for February [this] week — this is likely the final puzzle piece needed to gauge the next rate change,” online brokerage 2TradeAsia.com said in a note.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said investors will remain cautious ahead of key data releases this week, including reports on trade and cash remittances.

“A wider balance of trade deficit and weak remittance data may also weigh on our local currency’s trading which in turn is seen to have negative spillovers on the market,” Mr. Tantiangco said.

2TradeAsia.com placed the PSEi’s immediate support at 6,400 and resistance at 6,700, while RCBC’s Mr. Ricafort put immediate support at 6,250 and resistance at 7,000-7,100. — Ashley Erika O. Jose