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Manila Bulletin devider Business devider The Stock Market devider Market to look to BSP, trade data for cues

Market to look to BSP, trade data for cues

Published Apr 7, 2024 12:29 pm

With investor sentiment turning bearish amid fears that interest rate cuts are not coming soon due to rising inflation, the local stock market is seen to look to the Bangko Sentral ng Pilipinas’ upcoming policy meeting as well as the country's trade data for direction this week.

“Sentiment is turning bearish amid mounting upside risks to inflation, and tempered hopes for monetary easing by the Bangko Sentral ng Pilipinas and the Federal Reserve,” said Philstocks Research Manager Japhet Tantiangco.

He added that “with last week’s decline, bargain hunting opportunities are seen. However, with the bearish factors at play, and the lack of a positive catalyst, we may not see a strong rally yet from the market. A further decline for the bourse is still possible.”

“Next week, investors are expected to take cues from the BSP’s upcoming policy meeting. While policy rates will most likely be held at current levels, investors are expected to watch out for the BSP’s cues on their policy outlook. Cues of prolonged monetary tightening are expected to dampen sentiment, while cues of rate cuts are expected to do the opposite,” explained Tantiangco.

He added that “next week, investors may also look towards our labor force survey and foreign trade data for clues on the local economy’s health.”

“While local inflation came in hot in March at 3.7 percent and is within the BSP's estimate range of 3.4 percent to 4.2 percent, this print is the second straight month of accelerated CPI from February's 3.4 percent,” said online brokerage 2TradeAsia.com.

The brokerage added that it is worth mentioning that primary drivers of this jump are critical baskets. For instance, it said, rice was up 24 percent year on year. Rice weighs high in the food basket, influencing about 48 percent of its sub-index. 

“Another key basket to watch in April is oil and energy: after the OPEC+ agreed on supply cuts, oil is currently on a 5-month high, and local demand is likely to peak by mid-second quarter as the country rides out the remainder of an El Nino-compounded summer season,” the brokerage added.

2TradeAsia.com advises investors to seek out potential bargain picks in light of what is shaping up to be a very nuanced second quarter.

For stock picks, COL Financial has a BUY rating on Cebu Pacific noting that the international travel has yet to recover to its pre-pandemic level. 
 

Related Tags

Philippine Stock Exchange index (PSEi) COL Financial 2TradeAsia.com Philstocks Financial Japhet Tantiangco
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