Philippine stocks are expected to move sideways this week with an upward bias as overall investor sentiment turned positive on easing inflation rate.
Analysts said investors await the release of US inflation data this week, with a low figure expected to strengthen expectations the US Federal Reserve would start cutting interest rates sometime this year.
“Relative to forgettable year in 2023, global market participants are looking at 2024 to 2025 era through more rose-tinted glasses, more growth oriented-investing is underscored and consensus so far has tilted towards cash deployment,” online brokerage firm 2TradeAsia.com
It said any Fed’s move to start cutting rates would likely benefit the equities market, as this would encourage investors to reallocate their funds.
“In other words, a new easing cycle this year seems to be more of an eventuality instead of a myth, therefore brace for global funds’ asset class reallocation in anticipation of this shift in premiums,” it said.
Given the market’s upward momentum, investors are advised to be quick to lock-in short term gains even as the long-term strategy is to accumulate “ahead of economic inflection point in rallies”.
The local market’s immediate support is seen at 6,500 and resistance at 6,700 to 6,750.
The 30-company Philippine Stock Exchange index rallied by 179 points, or 2.78 percent, week-on-week to close at 6,629 on Jan. 5, as December inflation eased to 3.9 percent in December from 4.1 percent in November.
Analysts said while the Bangko Sentral ng Pilipinas’ outlook remained conservative, the trend supports a return to the ideal 2-percent to 4-percent inflation rate by end of 2024.
Investors also expect the BSP to start adjusting rates if the slowdown in inflation continues in the first half of 2024.
The Average market turnover improved by 11 percent last week to P4.3 billion, while net foreign buying reached P343 million.