Second quarter earnings and inflation indicators will stay in focus as the market awaits the Bangko Sentral ng Pilipinas’ (BSP) next policy meeting in the middle of August.
The benchmark Philippine Stock Exchange index (PSEi) ended last week at 6,315.93, for a weekly gain of 0.84 percent. Daily volume moved up to an average of P6.9 billion, data from the stock exchange showed.
Last week saw the US Federal Reserve raise key interest rate by another 0.75 percent. The US economy contracted for a second straight quarter, heightening concerns of a global recession already underway.
Meanwhile, domestic second quarter earnings would be in the spotlight.
Gabryle Aguila, head of equity research at stock brokerage house Unicapital Securities Inc., said the initial wave of earnings releases from Bank of the Philippine Islands,
Manila Electric Co. and Wilcon Depot Inc. were positive so far.
“We expect mixed results in the coming weeks as companies report the effects of economic challenges arising from the Russia-Ukraine conflict, with [Universal Robina Corp.] reporting margin compression from heightened input commodity costs,” Aguila said in his outlook report.
“Still, the economic recovery trajectory trend is … solid as these companies have registered revenue growth amid the macro-economic backdrop,” he added.
Monday would also see investors position ahead of the PSE’s latest index rebalancing on Aug. 8. The bourse announced Consunji-led Semirara Mining and Power Corp. would be joining the 30-member index, replacing Frederick Dy’s Security Bank Corp.
During the post-State of the Nation Address briefing last week, BSP Governor Felipe Medalla signaled the likelihood of another interest rate increase of up to 50 basis points in August.
Medalla also ruled out another off-cycle move, which was what the BSP did last month to cool surging consumer prices.
Stock market veteran Jonathan Ravelas advised investors to stay alert for continued downside risks.
“With inflation and interest rates yet to peak, market remains vulnerable to sell-offs. Expect a test toward the 6,000 levels,” said Ravelas, a financial strategy consultant at e-Methods for Business Management Corp.