Mixed sentiment for stocks this week
While the local stock market is seen to be buoyed by prospects of a big drop in pump prices this week, sentiment may continue to be dampened by the weak peso.
“The local market rode on positive momentum last week but the sustainability of this rally is questionable amid the lingering economic headwinds that may dampen sentiment,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.
He noted that “This includes the peso’s further weakening, and the supply problems of certain agricultural goods, both of which pose upside risks to inƪation.”
“Next week, investors may also watch out for the upcoming US June inƪation report as this would provide clues on how aggressive the Federal Reserve will act in their next policy meeting,” Tantiangco said.
He added that, “investors may also take cues from our upcoming foreign trade, foreign direct investments, and Overseas Filipinos’ remittance data.”
Brokerage firm 2TradeAsia.com warned that, “Inƪation printing at 6.1 percent is practically just stronger conƩrmation of another round of hikes this month (at least 50bps) lest the BSP risk being more behind the curve.”
It noted that, “transport CPI is facing more upward pressure from higher minimum fares in July, as well as a higher import bill due to forex disadvantages.”
“On the latter, note that foodto-total imports of the country is at 13 percent last year, one of the highest in the region,” 2TradeAsia. com pointed out.
Meanwhile, it said that, “Feelers for Ʃrst half 2022 results are gradually materializing. The expected prevalent theme will be margin compression, particularly for those who import raw materials (as the forex plus freight impacts are twicecharqed) and those whose revenue models are dependent on local consumer conƩdence.”
The flipside is that exporters, OFW/BPO driven sectors, and inbound tourism, among others, are safe (if not thrive) in these same conditions.
“Overall, participants should brace for forex devaluation and capital formation to take a backseat to disinƪation efforts. This postpones most growth stories to no earlier than 2023, making underrated but resilient bargain plays more rewarding in the long-term,” 2TradeAsia. com said.