US inflation ready to stamp out PSEi’s budding strength
The upcoming US inflation data would set the tone for markets across the globe and in the Philippines, where the benchmark Philippine Stock Exchange index (PSEi) rebounded 3.2 percent the previous week.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said in a text message the next major catalyst was the US consumer price index, which was due for release on July 13.
The PSEi ended Friday’s session with a modest 0.15-percent increase to 6,361.82. Gains for the week trimmed the year-to-date loss to 10.7 percent.
For the PSEi, resistance hovered between 6,500 and 6,600 while immediate support was seen at 6,100 to 6,000, Ricafort said.
Local stocks staged a rally after the Philippine government announced June inflation at 6.1 percent, which was comfortably within expectations despite accelerating at the fastest pace in four years.
Meanwhile, Bangko Sentral ng Pilipinas Governor Felipe Medalla said last Thursday they were prepared to raise the policy rate by half a percent during the next meeting in August, helping the Philippine peso strengthen against the US dollar on Friday after breaching an almost 17-year low.
Investment opportunity
Sun Life Investment Management and Trust Corp. president and chief investment officer Michael Enriquez said the country’s economic fundamentals remained intact despite economic headwinds.
The company expects the Philippines to grow by 8.2 percent in 2022 on the back of strong domestic consumption.
“Despite all these, we still see opportunities in both global and local equities moving forward,” Enriquez said.
“Sustained consumer demand and confidence contribute to the continued growth of corporate earnings. And with the Philippine Stock Exchange trading below its five-year average PE (price to earnings) multiple, there are certainly opportunities for long-term equity investing,” he added.
