Bulls raring for a return on rate cut hopes

The benchmark Philippine Stock Exchange Index (PSEi) gained ground during the first week of 2024 on improving investor sentiments after new inflation data showed easing price pressures.

The PSEi finished the past week at 6,629.64, up 2.8 percent, after a muted year-end close as data from the Philippine Statistics Authority showed inflation easing to 3.9 percent in December from 4.1 percent the previous month.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the December inflation print was within the Bangko Sentral ng Pilipinas’ (BSP) target range of 2 percent to 4 percent.

Potential easing

He added this could potentially ease to below 3 percent in the next two months “due to higher base/denominator effects, thereby [it] could help justify any possible cut in local policy rates, especially if the [US Federal Reserve] starts cutting rates in 2024.”The research division of Metropolitan Bank & Trust Co. also supported the view that policy rates could ease should core inflation move lower.

“[W]e think that dissipating price pressures in other nonvolatile commodity prices as indicated by the move lower in core inflation (from 4.7 percent in November to 4.4 percent in December), will make the case for the BSP to consider lowering rates as early as June,” Metrobank said.

Meanwhile, Ricafort said bulls can look for potential retests at 6,700 before targeting the 7,000 level. On the other hand, immediate support levels can be found from 6,460 to 6,360, he said. —Miguel R. Camus INQ