Omicron, inflation, jobs data to influence stock market

Published December 5, 2021, 7:00 PM

by James A. Loyola

Stock investors are seen to remain cautious amid uncertainty over the impact of the Omicron variant while watching out for the release of Philippine inflation and employment data.

“Last week’s decline brought the local market back to its 7,000 – 7,100 support range. This week, we may see this support range tested,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

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He noted that, “Investors are still expected to watch out for developments over the Omicron variant. If the said strain is detected in more parts of the world, worse, if it enters the Philippines, then it may escalate COVID-19 and economic worries which could pull the local market down further.”

“A repeat of the April and August’s reimplementation of stricter lockdowns will likely trigger bigger investor unloading, but little data has been known from Omicron so far that anticipating policy changes (and by extension, medium-term fundamentals) seems to be speculation at best,” said 2TradeAsia.com.

It added that, “For now, expect market sentiment to glide with developments on this front, especially if the country logs an omicron case of its own.”

Meanwhile, 2TradeAsia.com said “A series of macroeconomic releases will highlight (the) week, particularly inflation and unemployment reports on Tuesday, Dec. 7.

It noted that, “These numbers will round up estimates for the year and set up expectations for 2022. For instance, inflation trend in November will enable better visibility for December-January prices particularly in seasonally-sensitive baskets such as food and transport.”

Additionally, the brokerage said that, “despite consensus expecting the BSP (Bangko Sentral ng Pilipinas) to maintain the status quo on rates on its final policy meeting for 2021 (on Dec. 16), any CPI surprises from here on out makes moves for next year less dear-cut, especially in the context of a more hawkish Fed.”

Regarding the October labor data, Tantiangco said “If we see better employment figures, then it may give an upward boost to sentiment since it confirms the continuing recovery momentum of our local economy.”

“Investors may also take cues from our upcoming inflation, foreign trade, and foreign direct investments data this week,” he said.

For stock picks, Abacus Securities Corporation said “We expect Metro Pacific to record a strong performance in the fourth (quarter) as vehicular traffic in NCR (National Capital Region) is already at par with pre-pandemic levels. Accumulate.”

Abacus also noted that, “Despite the many unknowns from the Omicron Covid variant, investors may want to take this as an opportunity to acquire good names at Black Friday prices. We would look in particular for dips in ICTSI, BDO Unibank, GT Capital, and Puregold, among others.”

Meanwhile, COL Fianncial said it has a BUY rating for Petron after its third quarter performance beat estimates due to higher-than-expected revenues.

“While we are wary of the emergence of the Omicron variant, we think that its impact will not be as damaging as the previous COVID-19 surges,” it noted.

COL said “This is because more than half of the target population are already fully vaccinated, the government seems to be more pro-active in implementing travel restrictions this time, and COVID-19 tests are more accessible.”

“Moreover, we think that fuel demand in the country could be sustained as long as key industries and public transportation remain operational,” it added.

 
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