Analyst: Inflation-weary PH stocks facing another setback

Philippine stocks could trade lower ahead of the release of local inflation data and a key interest rate decision in the United States.

The benchmark Philippine Stock Exchange Index (PSEi) dropped over 3.8 percent the previous week as “market headwinds [persisted],” said BDO Unibank Inc. chief strategist Jonathan Ravelas.

These included expectations that the US Federal Reserve would deliver an aggressive 50-basis point interest rate hike to cool surging inflation. Meanwhile, the BSP indicated it would consider raising its key interest rate in June—sooner than earlier forecasts of an increase in the second half of 2022.

Ravelas told the Inquirer headline inflation likely rose 4.7 percent in April amid accelerating price increases for consumer goods. The Philippine Statistics Authority will release April inflation data on May 5.

“Heading into next week, it’s more sideways to down [for the PSEi] ahead of the Fed as we try to digest Philippine inflation, which could likely print at 4.7 percent. That’s my forecast,” he told the Inquirer.

“Ahead of that, we are seeing a stronger US dollar and weaker equity market,” he added.

In terms of technical indicators, Ravelas noted the weekly close of the PSEi at 6,731.25 “signals” a potential decline toward the 6,500 to 6,000 levels. INQ