The Manila Times

Continued consolidation likely; Fed move awaited

ED PAOLO SALTING

SHARE prices could come under pressure as investor attention returns to inflation and policy rate hikes starting with this week’s US Federal Reserve (Fed) policy meeting.

While the benchmark Philippine Stock Exchange index (PSEi) ended last week in the green, analysts noted that investor concerns were holding back a rise to the 7,100 level despite a run of positive economic data.

“The local market has been moving sideways within the 7,000-7,100 resistance range as it is having a hard time getting past the said zone,” Japhet Tantiangco, senior research analyst at Philstocks Financial Inc., said.

“Advancing further has been difficult amid lingering macroeconomic concerns from inflation to interest rates to external headwinds,” he added.

“The lack of catalysts that would support our economic outlook also added to the difficulty as well.”

The benchmark PSEi gained nearly 500 points to return to the 7,000 level in mid-January, rising to a peak of 7,094.86 on January 18, but has since seen its momentum falter.

Last Friday saw it pick up by just 9.46 points, or 0.13 percent, to 7,052.16, a result analysts attributed to overnight gains in US markets as investors continued to ignore Thursday’s announcement that the Philippine economy had grown by an above-target 7.6 percent in 2022.

Analysts have said that the growth result could bolster continued tightening by the Bangko Sentral ng Pilipinas, whose policymaking Monetary Board will hold its first meeting for the year on February 16.

The outcome of the US central bank’s January 31 to February 1 meeting will be considered as well as a slew of economic reports due over the next two weeks, including January inflation (February 7) and employment (February 8).

“Chartwise, the local market’s 10-day exponential moving average is seen as its immediate support. Its resistance remains at the 7,0007,100 range,” Tantiangco said.

In addition to this week’s Fed meeting, investors could also take their cues from the latest purchasing managers’ index due this Wednesday.

Online brokerage 2TradeAsia. com said the “positive surprise” brought by last year’s gross domestic product growth result “could also imply some surprise inflation that has crept in” and support a rate hike announcement.

While the market’s “mini consolidation appears to be leveling after several weeks of bullish energy, the narrowing trading range should be healthy for the larger uptrend to gather more steam, pending stronger catalysts in the first quarter of 2023,” it added.

“That being said, expect selling pressure during intraday rallies. Trade the range.”

2TradeAsia sees the market’s support at 6,900 and resistance at 7,100-7,200.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp.,

said that 7,100 would serve as the next gateway to further upsides such as a potential re-test of the 7,552.20 high posted on Feb. 9, 2022.

“Meanwhile, immediate minor support levels will be at the 6,8406,950 levels and immediate major support levels that will help keep intact the underlying upward momentum since Dec. 19, 2022 is at the 6,650-6,750 levels,” he said.

Business Times

en-ph

2023-01-30T08:00:00.0000000Z

2023-01-30T08:00:00.0000000Z

https://digitaledition.manilatimes.net/article/281861532642146

The Manila Times