PSEi expected to shatter 6,000 following Fed pause

The Philippine Stock Exchange index (PSEi) is expected to breach the 6,000 territory this week after the Federal Reserve decided to stop hiking rates, but local news may yet affect investor appetite.

China Bank Capital Corp. managing director Juan Paolo Colet, in a message to the Inquirer, said the PSEi could trade within the 5,900 to 6,150 range.On Friday, the benchmark index climbed by 0.26 percent, or 15.49 points, to close at 5,989.27 while the broader All Shares index rose by 0.27 percent, or 8.88 points, to settle at 3,263.05.

“After a good trading week in the US spurred by views that the Federal Reserve is potentially done with its rate hike campaign, we may see a bullish spillover to domestic stocks if the October inflation print on Tuesday (Nov. 7) shows an easing of consumer price pressures,” Colet explained.

The Bangko Sentral ng Pilipinas projected that inflation in October could have settled within 5.1 percent to 5.9 percent due to lower prices of rice, meat and vegetables, among others. In September, inflation hit 6.1 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the Monetary Board “could match the pause” made by the Fed to “maintain healthy interest rate differentials to support stability of the peso exchange rate, import prices and overall inflation.”

‘Better growth picture’

Another market catalyst cited by both Colet and Ricafort could be the gross domestic product (GDP) report for the third quarter.

Stocks could get a boost if the “third quarter GDP release on Thursday (Nov. 9) paints a better growth picture for the economy,” Colet said.

In the second quarter, GDP slowed down to 4.3 percent from 7.5 percent a year ago. Research consultancy firm Pantheon Macroeconomics had said the country’s economy would likely grow weaker in the third quarter because of lower private consumption.

Ricafort, meanwhile, pegged the PSEi’s support level at the 5,800 to 5,900 territory.

—Tyrone Jasper C. Piad INQ