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Volatile trading seen ahead of Aug. inflation data

SHARES may continue to climb this week on sustained bargain hunting, but trading may be volatile as investors await the release of August inflation data.

The Philippine Stock Exchange index (PSEi) went up by 104.37 points or 1.58% to close at 6,692.65 on Friday, while the broader all shares index rose by 50.49 points or 1.44% to 3,548.53.

Week on week, the PSEi declined by 59.85 points or 0.89% from its close of 6,752.50 on Aug. 26.

“The index posted a strong uptick [on Friday] as bargain hunters picked up shares following the recent pullback, which resulted in the successful test of the 6,500-6,600 support level,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail.

“The local market ended the week on a strong note, almost erasing a 183-point drop midweek, as investors repositioned ahead of US labor data,” online brokerage 2TradeAsia said in a report.

For this week, Mr. Mercado said that the market could move with an upward bias early on amid momentum from Friday’s climb.

“We see [Friday’s] bullish momentum carrying over into the early part of next week following the successful test of the 6,500-6,600 support,” Mr. Mercado said.

However, this upward momentum will likely be accompanied by higher volatility as investors react to key economic data, he said. These include US job data released on Friday and the August Philippine inflation report set to come out on Sept. 6, Tuesday,

The US Labor department’s employment report released on Friday showed nonfarm payrolls increased by 315,000 jobs last month after surging 526,000 in July, marking the 20th straight month of job growth.

Meanwhile, a BusinessWorld poll of 13 analysts yielded a median estimate of 6.4% for August inflation, within the 5.9-6.7% forecast of the Bangko Sentral ng Pilipinas and steady from the July level.

If realized, it would exceed the central bank’s annual 2-4% target for the fifth straight month and its 5.4% forecast, and would also be quicker than the 4.4% print in the same month last year.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said hawkish signals from the US Federal Reserve will continue to affect the local market.

“The aggressively hawkish policy outlook of the Federal Reserve is still expected to weigh on the local market [this] week, especially if the rise in US interest rates and the decline in Philippine peso continues,” Mr. Tantiangco said in a Viber message.

The peso closed at a new all-time low of P56.77 on Friday, down by 35 centavos from its P56.42 finish on Thursday, data from the Bankers Association of the Philippines showed.

Year to date, the peso has weakened by P5.77 or 11.31% from the P51 close on Dec. 31, 2021.

China Bank Securities’ Mr. Mercado placed the PSEi’s support at the 6,500-6,600 range and resistance at 6,900, while Philstocks Financial’s Mr. Tantiangco put support at 6,600 and immediate resistance at its 200-day exponential moving average of 6,734.81. — Justine Irish D. Tabile

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