Stocks are expected to remain on a consolidation mode as investors await the outcome of the Bangko Sentral ng Pilipinas policy meeting this week following the higher-than-expected inflation rate in January.
Analysts said a minimum of 25-basis-point increase in interest rates would be on the table for the BSP rate-setting meeting on Feb. 16.
Investors are also not ruling out a possible 50-bps rate increase as inflation rate hit a fresh 14-year high of 8.7 percent in January, higher than 8.1 percent in December.
Manulife head of equities Mark Canizares said inflation rate and interest rates would continue to affect market trading.
“We believe that the Philippine stocks have largely priced-in the prospective rate actions of the US Fed and BSP for this year,” Canizares said.
“As long as prospective indications are not for an uptick in rates more than what is expected, it is likely that the local stock market will re-focus its view to domestic factors this quarter,” he said.
BSP Governor Felipe Medalla said last week he was not ruling out the possibility of another “surprise supply shock” as January inflation rate was above BSP’s forecast range of 7.5 percent to 8.3 percent.
Canizares said the fourth-quarter earnings results of listed companies would also be another area of interest for investors.
The PSE index, the 30-company benchmark, fell 2.1 percent last week to close at 6,876.79 on Friday amid the lack of buying pressure.
The broader all-share index also went down by 1.4 percent to settle at 3,653.11. Foreign investors turned into net sellers of P1.8 billion worth of stocks last week.
Meanwhile, US stocks closed out a lackluster week with a mixed session on Friday.
The gains by oil producers like Chevron and Halliburton, as well as other oil services companies, came after Russia announced it would trim production by 500,000 barrels per day in March after Western countries imposed a price cap over the Ukraine conflict.
The rally in energy stocks helped lift both the Dow and S&P 500 to positive sessions even as higher Treasury bond yields weighed on the Nasdaq.
The Dow Jones Industrial Average finished at 33,869.27, up 0.5 percent.
The broad-based S&P 500 climbed 0.2 percent to 4,090.46, while the tech-rich Nasdaq Composite Index declined 0.6 percent to 11,718.12.
Briefing.com analyst Patrick O’Hare said investors are in “wait and see” mode ahead of next week’s consumer price index report, which will influence the outlook for future Federal Reserve interest rate hikes.
All three major indices finished with losses for the week in a pullback after a torrid January as Treasury yields advanced. With AFP