Share prices are expected to trade sideways with a downward bias this week after last week’s sharp drop on fears local interest rates may go up earlier than expected due to the continued spike in commodity and oil prices.
Analysts said the upcoming national elections could also cause the investors to stay on the sidelines while waiting for the outcome of the national polls.
Analysts expect the the Philippine Stock Exchange Index this week to trade between 6,500 points and 6,700 points
Online brokerage firm 2TradeAsia.com said investors will be keenly watching the upcoming US Federal Reserve’s policy meeting this week.
“Strong consensus for a 50 basis point hike is likely price-in but there is now mounting pressure on the Bangko Sentral ng Pilipinas (BSP) to catch up in some way, likely by making parallel rate hikes,” said 2TradeAsia.com.
BSP Governor Benjamin Diokno last week said monetary authorities may consider raising interest rates from the record-low 2 percent by June this year. BSP’s next policy meeting is set on May 19.
Investors will also monitor the release of the April inflation rate late this week.
The BSP on Friday predicted a high inflation rate of 5 percent for the month of April from 4 percent in March due to higher prices of food, oil and electricity.
Meanwhile, the release first-quarter corporate earnings could provide a slight uplift on the market as companies are expected to report strong results. With AFP
However, focus will shift on the earnings outlook for the second half of the year due to margin pressure caused by higher prices of raw materials.
The PSEi last week dropped to an eight month low of 6,731, down 3.8 percent week-on-week, on concerns about the rising interest rates and the high inflation rate.
All sectoral indices ended in the red, led by mining and oil which sank 9 percent; property index which fell 4.9 percent; financials which declined 4.6 percent; services which lost 3.8 percent; holding firms which shed 3.3 percent; and industrials which slipped 2.6 percent.
Foreign investors were net sellers for the week by P1.46 billions while the average daily value traded reached P6.2 billion.
Wall Street stocks, meanwhile, concluded a bruising April on an ugly note Friday following disappointing results from Amazon, while European and Asian markets forged higher.
Amazon plunged 14.1 percent after offering a disappointing forecast as it battles rising costs amid slowing growth compared with earlier in the pandemic. The company reported its first loss since 2015.
The results were the latest in a mixed bag of earnings from large tech stocks, which are widely held and play an important role in major indices.
“Amazon was the latest to catch Wall Street off guard, reporting its first loss since 2015 amid a multitude of challenges facing the company,” said Craig Erlam, analyst at forex platform OANDA.
“Like many others, the company is struggling to adjust to post-pandemic life, having scaled up massively over the last couple of years,” Erlam said.
Earlier, European stock markets finished higher as investors shrugged off data showing that the eurozone’s economy had slowed to 0.2 percent in the first quarter while inflation stayed at record levels. With AFP