Downward bias seen for PH shares

PHILIPPINE shares are likely to trade sideways this week with a downward bias as recent local and global economic data can have an effect on investor sentiment.

The Philippine Stock Exchange index declined by 211.36 points, or 3.1 percent, to 6,530.04 points week on week.

Among others, market sentiment was weighed down by global crude oil prices that recently soared to new three-month highs and nearing 14-year highs at above $120 per barrel. This helped clobber US equities and eventually local shares.

“Overnight declines in the US stock markets, the recent increase in US Treasury yields to above 3 percent for most long-term tenors, the latest US CPI (consumer price index)/inflation data, which posted 8.6 percent. All this data will determine the Federal Reserve’s hawkishness on future rate hikes and asset/Treasury/mortgage-backed securities sales,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in his analysis.

He added that all of US’ actions are an effort to clamp down elevated inflation even if it would lead to risks of economic slowdown or even risk of recession, which could then lead to lower sales, income and valuations of some listed companies worldwide.

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On the other hand, despite stronger jobs/employment data in the local front, this was offset by other economic data or slower growth in exports and manufacturing. Headline inflation also rose to 5.4 percent in May 2022.

The local stock market also eased amid signals for another possible local policy rate hikes over the next two rate-setting meetings that can be offset by a possible reduction in large banks’ reserve requirement ratio later this year.

Meanwhile, Ricafort sees the support levels at 6,400-6,500 and resistance at 6,650.