Local stocks are expected to continue moving sideways this week as high inflation and interest rates weighed on investor sentiment.
Analysts said investors were worried the Bangko Sentral ng Pilipinas would continue to deliver big rate hikes over the short term as inflation rate remained elevated.
“Inflation-interest rate related gyrations should keep the market anxiety up over the near term period,” online brokerage firm 2TradeAsia.com said.
The BSP on Thursday raised the benchmark interest rate by 50 basis points to 6 percent, the highest in 16 years.
BSP Governor Felipe Medalla hinted the central bank would continue its tightening cycle to curb inflation which accelerated to a 14-year high of 8.7 percent in January, faster than 8.1 percent in December 2022.
The BSP also raised the 2023 average inflation forecast to 6.1 percent, from previous estimate of 4.5 percent.
Online brokerage firm Utradeph.com research analyst Neil Andrew Maderaje said stocks were moving on a downward path, as investors needed to price-in inflation concerns and the BSP’s latest policy rate hikes.
Investors were also worried over the continued rise in inflation and interest rates that could push businesses and consumers to cut back on spending and affect economic growth.
The bellwether Philippine Stock Exchange index slipped 1.42 percent last week to close at 6,779.02 on Friday, while the broader all-share index dropped 0.86 percent to 3,621.69.
The influx of corporate earnings, however, could provide the market some boost this week. Analysts said investors would search for clues in corporate earnings, including their 2023 growth targets and capital spending to plot the PSEi direction.
Among the companies reporting 2022 earnings this week are Ayala Land Inc., SM Prime Holdings Inc. and Wilcon Depot Inc.
Meanwhile, global stocks mostly fell Friday to conclude a lackluster week as markets grappled with fresh inflation data that raised worries of further central bank tightening.
After a down day on European and Asian equity bourses, US stocks also opened lower in the wake of hawkish comments from some Federal Reserve officials.
US equities moderated later in the day as the yield on the 10-year US Treasury note edged lower, cutting losses on the Nasdaq and lifting the Dow to a modest gain. Analysts pointed to limited volume in US trading ahead of a holiday on Monday in observance of President’s Day.
“It isn’t just Fed expectations that are rising, traders are also expecting the [European Central Bank] to send rates much higher,” said Oanda’s Edward Moya.
“It looks like global growth will definitely take a harder hit as monetary policy gets even more restrictive over the next few months,” he said. With AFP