Investors awaiting US growth results

THE stock market could see a lift from US growth data due later this week, analysts said, with investors continuing to look for clues as to the possible direction of interest rates both here and abroad.

After gaining in the first two weeks of the year, the benchmark Philippine Stock Exchange index (PSEi) ended 2.1 percent lower week-on-week at 6,503.54 last Friday.

Regina Capital Development Corp. Managing Director Luis Limlingan said traders were looking forward to the release of advance estimates of the United States’ fourth quarter and full-year growth for 2023 on Thursday, US time.

Investors will also be anticipating preliminary Philippine growth data due for release on January 31, he added.

Sentiment last week was said to have been dampened by news that growth in China — one of the Philippines’ top trading partners — was the slowest in over three decades last year.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the PSEi could still benefit from Santa Claus and the start-of-the-year rallies but worries over the El Niño weather pattern may trim gains.

The weather pattern, which could last until well into 2024, is expected to lead to dry spells and even droughts, reducing farm output and “some pick-up in rice or food prices and overall inflation,” he added.

Online brokerage 2TradeAsia. com, meanwhile, said investors were looking forward to the US Federal Reserve’s first meeting for the year on January 30 to 31, adding that markets remained hopeful of a policy rate cut before the middle of the year.

“A gradual ramp-up in expectations is more desirable at the moment, in the face of medium-term volatility in energy prices and geopolitical tensions flaring up in the Middle East and China,” it added.

2TradeAsia.com also said the Bangko Sentral ng Pilipinas was not expected to adjust policy when it meets two weeks later.

“The market failed to revisit the 6,700 level and is currently retesting 6,500,” it noted.

“Nothing short of expected, as the three-month-long rally has to pull back and take pauses to reaffirm its legs,” 2TradeAsia continued.

“The goal is to stay in the marathon for more exciting impetus expected in the second half of the year.”

Chart-wise, the stock market’s support is seen between 6,400 and 6,510 while resistance is expected to be in the 6,600 to 6,700 range.