Softer inflation rallies PH investors

The market would be holding on to a lifeline that allowed it to stay above 6,400 for two consecutive sessions last week: easing inflation.

The benchmark Philippine Stock Exchange Index ended last week at 6,492.75, up by 1.26 percent from 6,411.91 the previous week. Traders were energized by news that inflation slowed to 3.7 percent in June, better than the projected 3.9 percent, due to lower electricity rates.

Compared with the beginning of the year, however, the index is still down 0.93 percent from 6,554.04.

This week, the bourse may be able to sustain its recovery, according to Philstocks Financial Inc. research manager Japhet Tantiangco.

“The latest inflation data is seen to be supportive of prospects of a rate cut soon by the Bangko Sentral ng Pilipinas (BSP), which in turn is positive for the market,” Tantiangco said.

Inflation data in the United States is also scheduled for release this week, he added. This is another crucial factor for the Philippine market, as any direction to be taken by the US Federal Reserve could be mirrored by the BSP.

Central banks typically cut interest rates when inflation is slow to spur spending and investments. Rates are raised when inflation accelerates to temper liquidity.

Trading platform 2TradeAsia.com sees the index’s immediate support level at 6,350 and resistance at 6,600. —MEG J. ADONIS INQ