Stock investors watching foreign markets for clues

Investors in Philippine equities would be taking their cue from overseas markets this week ahead of an anticipated inflation report in the United States.

The latest US consumer price index (CPI) report for the month of September would be released on Oct. 13.

“The major event will be the US CPI. The results will probably make investors reassess the [Federal Reserve’s] stance on the tightening of its policy rates to combat inflation,” Luis Gerardo Limlingan, head of sales at stock brokerage house Regina Capital Development, said in a text message. The benchmark Philippine Stock Exchange index (PSEi) recovered 3.3 percent the past week, but remained inside bear market territory after closing at 5,932.19 on Friday.

Limlingan pegged the near-term PSEi support zone at 5,700 with resistance seen at 6,000.

Jonathan Ravelas, financial strategy consultant at e-Methods for Business Management Corp., expected more downward pressure for the benchmark measure.

Moreover, he noted the market was vulnerable to selloffs given that inflation and the interest rate hiking cycle had yet to peak.

“Risk lies at the 5,500 levels [for the PSEi],” Ravelas said in a tweet.

On Friday, the Philippine peso again traded near its record low of P59 against the US dollar. This was an indicator of looming volatility in the financial markets in the coming days or weeks.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the Philippines had sufficient dollar buffer, otherwise known as gross international reserves, to smoothen large fluctuations in the currency market. INQ