Stocks may rise ahead of inflation, labor data

STOCKS could rise this week on positive sentiment ahead of the release of latest inflation and labor data and as investors await the government’s announcement of new restrictions to curb the spread of coronavirus disease 2019 (COVID -19).

The Philippine Stock Exchange index (PSEi) went up by 62.47 points or 0.91% on Friday to close at 6,897.13, while the broader all shares index climbed 29.58 points or 0.69% to end at 4,261.69.

Week on week, the benchmark index climbed by 110.51 points from its 6,786.62 finish on Aug. 27.

“Measured comments from US Fed chair [Jerome H.] Powell at Jackson Hole set a good tone at the start of the week while an improvement in Metro Manila’s [COVID-19] outlook closed it on a positive note,” China Bank Securities Corp. Research Associate Jason T. Escartin said in an e-mail on Friday.

“Market sentiment got a boost from hopes that the government will shift its strategy from broadbased to granular lockdowns, in turn allowing more economic activities,” Philstocks Financial, Inc. Senior Research Analyst Japhet

Louis O. Tantiangco said in a Viber message on Friday.

“Gains were tempered by the WHO’s (World Health Organization) confirmation of the Delta variant’s dominance and community transmission in the Philippines, as well as the contraction of our country’s manufacturing sector this past August according to the latest IHS Markit Philippines Manufacturing PMI data,” he added.

For this week, analysts said investors are waiting for the government’s decision on new restrictions as the modified enhanced community quarantine in Metro Manila is only set to last until Sept. 7.

The government’s Interagency Task Force for the Management of Emerging Infectious Diseases over the weekend approved a proposal to implemented granular lockdowns in Metro Manila beginning Sept. 8, which will be up for presidential okay.

“Aside from the government’s quarantine decision, investors are expected to monitor our CO VID-19 cases,” Mr. Tantiangco said. “Investors are expected to watch out for our upcoming July labor force survey and August inflation data for clues on how the economy is faring.”

“In our view, the PSEi still has a good chance to test the 7,000 level given the positive backdrop of [this] week’s risk events, namely August inflation and Metro Manila’s quarantine setting after Sept. 7,” China Bank Securities’ Mr. Escartin said.

“We think the BSP (Bangko Sentral ng Pilipinas) has already telegraphed a possible uptick in August inflation, dampening downside risk on equities. It also included in its messaging a supportive monetary policy, cementing optimism,” he added.

The Health department logged 20,741 new COVID-19 cases on Saturday for a 28% positivity rate. The country’s case tally now stands at over 2.06 million, with 157,646 active infections.

Meanwhile, the Philippine Statistics Authority is set to release the July 2021 Labor Force Survey and the August inflation report on Tuesday, Sept. 7. —