Philippine stocks are expected to move sideways this week as investors remain highly sensitive on inflation and interest rate-related factors.
Analyst said the higher-than-expected US inflation in December could temper investors expectation that the Federal Reserve would ease interest rates soon.
The higher December inflation rate was primarily driven by housing costs and higher fuel and energy prices, according to 2TradeAsia.com.
It noted, however, that core inflation rate eased to 3.9 percent from 4 percent which should still support views that inflation was falling and a rate cut could be in the offing.
“While more confident, market participants remain highly sensitive on inflation and interest rate related forces. A more growth-oriented strategy relative to 2022 and 2023 is highlighted given the inflection in market confidence, switching for higher earnings potential plus expansion stories in line with capital costs being more accessible,” 2TradeAsia.com said.
Among the sectors that could mostly benefit from lower inflation and interest rates are banking, power, gaming, holding firms and property, analysts said.
The bellwether Philippine Stock Exchange index advanced by 13 points, or 0.20 percent, last week to close at 6,643, as investors waited for catalysts to support the market’s upward trek.
Average market volume jumped 51 percent to P6.5 billion, while net foreign buying improved to P529 million.
Analysts said while the market was building momentum towards the 6,800 level, investors were waiting for more catalysts to support the movement.
Aside from inflation and interest rates, other factors that could boost the index are positive corporate earnings and continued easing of cost of basic goods.