US inflation results seen driving market

HIGHLY-ANTICIPATED US inflation data for February due this Tuesday, US time, will likely weigh on the stock market’s movements this year, analysts said.

The bellwether Philippine Stock Exchange index (PSEi), which has now advanced for seven straight weeks, closed 0.33 percent higher week-on-week at 6,942.21 last Friday.

The main index had fallen by as much as 113 points last week after Philippine inflation snapped a four-month downward trend, but some bargain hunting towards the week’s end revived sentiment.

Luis Limlingan, Regina Capital Development Corp. managing director, said that this week “may be another test” at the 7,000 level with inflation news abroad as the trigger.

China Bank Capital Corp. Managing Director Juan Paolo Colet said the PSEi’s ability to close above the resistance mark would “depend largely” on how “US equity markets react to the inflation report.”

“If we see data that bolsters bullish bets of a Federal Reserve policy rate cut in June, then our market will likely benefit from risk-on sentiment and move higher this week,” he added.

Online brokerage 2TradeAsia. com said the US inflation report is expected to “inject more activity at the discussion table,” particularly with regard to where interest rates are headed this year.

“The next Fed meeting is slated for March 19-20. Brace for interim price swings in rate-sensitive sectors, but expectations so far are leaning towards another nonmove from the Fed,” it added.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco, meanwhile, said the PSEi “could move sideways” given profit-taking pressures.

“Still, we expect positive sentiment towards 2023 corporate results to continue providing support to the bourse,” he said, adding that strong performances from Wall Street could lead to positive spillovers at home.

Investors are also expected to be waiting for fresh local economic data, including overseas Filipino workers’ remittances and foreign direct investments, Tantiangco said.

More large caps, led by the Zobel family’s Ayala Corp. and Ramon Ang-led San Miguel Corp., are expected to announce their full-year 2023 earnings this week, 2TradeAsia.com noted.

“Results continue to track ... expectations, with the average being pulled by positive results from some property, banking, power, holdings, and gaming; drags include telco and mining.”

Chart-wise, the stock market’s support is still expected to be between 6,700 and 6,800, analysts said.