Inflation fears keeping PSEi from hitting 7,000

After failing to breach the 7,000 barrier yet again, the Philippine Stock Exchange Index (PSEi) may see some consolidation as investors remained wary of inflation both on the local and global fronts.

The benchmark index swung between the 6,800 and 6,900 levels last week, ending at 6,822.32 on Friday amid an inflation spike in the United States.

“The markets would be anticipating the upcoming Fed/FOMC (Federal Open Market Committee) meeting and decision/statement as a source of new market leads on March 20, 2024,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

Ricafort said there was a “reduced possibility” of Fed rate cuts later in the year with both the US producer price index and consumer price index moving higher than expected.

Luis Limlingan, head of sales at stock brokerage house Regina Capital Development, also said it “would not be surprising to see more profit-taking ahead of the Holy Week and quarter-end close.”

Limlingan added that some consolidation may be seen until investors get more hints on the trajectory of inflation. Consolidation happens when a stock or index trades within a limited range.

In the Philippines, a hike in rice prices caused inflation to quicken to 3.4 percent in February from 2.8 percent the previous month, snapping a four-month downtrend. INQ