PHL stocks to move sideways before BSP review

PHILIPPINE SHARES may move sideways this week amid an expected rate hike by the Bangko Sentral ng Pilipinas (BSP) at its Aug. 18 meeting and profit taking after last week’s rally.

The Philippine Stock Exchange index (PSEi) continued to post gains on Friday inching up by 18.98 points or 0.28% to close at 6,699.66, while the broader all shares index went up by 13.59 points or 0.38% to 3,564.16.

Week on week, the PSEi surged by 294.16 points or 4.59% from its close of 6,405.50 on Aug. 5.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the PSEi climbed further on Friday “after Fitch Solutions upgraded its estimate for Philippine GDP (gross domestic product) growth for 2022 to 6.6% (from the previous estimate of 6.1%)” and better corporate earnings.

“Bargain hunters reigned, taking their cue from Wall Street’s ascent after a lower-than expected US inflation print,” online brokerage said in a report.

Wall Street rose on Friday as market sentiment was boosted by data showing a slowdown in consumer and producer prices in July, which could indicate that inflation has peaked and lead to less aggressive hikes from the Federal Reserve.

The Dow Jones Industrial Average rose 424.38 points or 1.27% to 33,761.05; the S&P 500 went up 72.88 points or 1.73% to 4,280.15; and the Nasdaq Composite climbed 267.27 points or 2.09% to 13,047.19.

The US consumer price index ended flat month on month last July from 1.3% in June. On an annual basis, inflation rose by 8.5% in July, slower than 9.1% in June.

Meanwhile, the producer price index for final demand declined 0.5% last month after climbing 1.0% in June. In the 12 months through July, it increased 9.8% after rising 11.3% in June.

For this week, Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said the market could move sideways ahead of the BSP Monetary Board’s policy review on Thursday.

“The market could move sideways ahead of the central bank’s policy meeting on Aug. 18 where it is expected to raise rates by at most 50 bps (basis points). But investors could also choose to pocket gains after last week’s rally,” Mr. Arce said.

“There could be some consolidation as the market awaits more data related to inflation and growth. Also, bets could be made ahead of the BSP meeting,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The majority of 18 analysts polled by BusinessWorld last week expect the Monetary Board to raise benchmark rates on Aug. 18, while two see no changes to borrowing costs.

Of the 16 analysts expecting a rate hike, 14 see a 50-bp increase while two anticipate a 25-bp move.

Online brokerage placed the PSEi’s support at 6,450 and resistance at 6,830, while RCBC’s Mr. Ricafort put support at the 6,400-6,500 range and resistance at the 6,800-6,900 levels. — J.I.D. Tabile