The local stock market is seen to be weighed down by expectations of more interest rate hikes by the US Federal Reserve, with the Bangko Sentral expected to follow, after the US reported high inflation for September.

“Next week, the local market is still expected to move with a downward bias amid expectations of hawkish policy actions by the Federal Reserve and the Bangko Sentral ng Pilipinas in their November meetings,” said Philstocks Financial Research Manager Japhet Tantiangco.

He noted that, “The US’ September inflation which has remained elevated points to another possible aggressive rate hike by the Fed. Such expectation is seen to weigh on the market given its negative impact on the local currency as well as on global economic prospects.”

“The high print all but ensures another tightening move from the Fed in the upcoming November meeting, which shows a near 90 percent chance of a 75bps hike as of this writing,” said 2TradeAsia.com.

It pointed out that, “This should provide sustained downside pressure in the medium-term, as locals would have to doubly contend with higher cost of capital and more currency devaluation (especially since the BSP is not expected to intervene with the peso while the Fed is on a run).

“The lingering inflationary risks which includes the Peso’s depreciation may also urge the BSP to be aggressive,” Tantiangco said.

He added that, “BSP Governor Felipe Medalla has already said that they are looking at a 50 to 75 basis point rate hike in their next meeting. The strong rate hikes, which are seen to have a downward effect on the economy, may also weigh on sentiment.”

“Next week, investors may also take cues from our upcoming OFW cash remittance and balance of payments data. Investors may also wait for the third quarter of first nine months corporate results,” Tantiangco said.

2TradeAsia.com advises investors to “Gauge volume build up and consider oversold shares along the way.”

For stock picks, Regina Capital Development Corporation has rated EEI Corporation a BUY because of the firm’s healthy level of backlogs while its power units gaining traction.

It added that, EEI is likely to benefit from the prioritization of infrastructure programs next year.

Philstocks is advising investors to cautiously accumulate GT Capital Holdings Inc. “as it is at bargain and its continuous dominance in the (automotive) industry could aid its growth.”

It noted that, vehicle sales grew by 64.2 percent in September as demand for commercial vehicles surged. Half of these were accounted to GT Capital’s subsidiary Toyota Motors Philippines.

Meanwhile, Abacus Securities Corporation said ICTSI is “a good stock to own during this time of market uncertainty. We expect third quarter volumes to remain strong and the company is on pace to beat full-year expectations. Keep buying on dips.”