PHILIPPINE SHARES may move sideways when trading resumes on Thursday as the market turns its focus to the release of US consumer and producer inflation data.
On Monday, the bellwether Philippine Stock Exchange index (PSEi) fell by 0.06% or 4.39 points to close at 6,741.07. Meanwhile, the broader all shares index climbed by 0.12% or 4.41 points to finish at 3,559.59.
Philippine financial markets were closed for nonworking days on Tuesday, April 9 (Day of Valor) and Wednesday, April 10 (Eid’l Fitr).
“With the Bangko Sentral ng Pilipinas (BSP) holding its policy rate as expected, market direction for the rest of the week will be driven mainly by US March consumer price index (CPI) and producer price index (PPI) data releases,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.
“A benign inflation print could keep the local index above the 6,700 level. On the other hand, if the data paints a challenging inflation picture that raises the risk of a further delay in US Federal Reserve rate cuts, then investors should prepare for volatility with a downward bias,” he added.
March US CPI data were scheduled for release overnight, while the PPI report will come out on Thursday.
Meanwhile, there could be an “upward correction” in Philippine shares following the BSP policy decision on Monday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The local stock market would also price in and digest the latest BSP monetary policy-setting meeting and decision after trading on April 8 when BSP Governor Eli M. Remolona, Jr. signaled a possible local policy rate cut in third quarter of 2024,” Mr. Ricafort said.
The BSP on Monday left its key rate unchanged at 6.5% for a fourth straight meeting and signaled a possible delay in rate cuts due to inflation risks.
The Monetary Board maintained its target reverse repurchase rate at a near 17-year high, as expected by 16 economists in a BusinessWorld poll. Interest rates on the overnight deposit and lending facilities were also left unchanged at 6% and 7%.
This is the fourth straight meeting that the BSP stood pat since its 25-basis-point (bp) off-cycle hike in October.
The BSP raised its risk-adjusted inflation forecast this year to 4% from 3.9%. However, it kept its risk-adjusted forecast for 2025 at 3.5%.
The central bank likewise hiked its baseline inflation forecast to 3.8% for 2024 from 3.6% but maintained its 3.2% forecast for next year.
“The BSP [rate cut] projection was still within almost everyone’s projection. For the next two days, volumes may pick up with some spillover from the price action movement in the US,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
Meanwhile, Mr. Ricafort put the PSEi’s minor support at 6,630-6,700 and major support levels at 6,360-6,500. — R.M.D. Ochave
