There's not much to expect from the market this week as low volume continues to prevent the bulls from making a strong comeback and with inflation expected to go up again in August or at least a slight uptick from July, analysts said.
The Philippine central bank sees August inflation in the 4.8 to 5.6 percent range from July's 4.7 percent.
'The month-on-month jump is quite significant, so brace for a knee-jerk reaction upon confirmation (this week). Continued inclement weather up to early September could aggravate mood; with the full-month impact of the recent wage hike plus high global oil prices and ramping rice inflation, August data risks more hawkish action in the medium-term,' 2TradeAsia said in a note.
Against this backdrop, 2TradeAsia sees range trading this week while the Philippine Stock Exchange index finds stronger footing above 6,000. Immediate support is at 6,000 and resistance at 6,400, said the stock market research portal.
The PSEi last week inched up by 20 points to 6,181 week-on-week as most sectors booked gains even as net foreign selling widened to an average of P2.03 billion.
Juan Paolo Colet, managing director at China Bank Capital, shared the same view.
Barring surprises, he said the index could see action within the 6,150 to 6,350 area.
'This week's market direction will be shaped by investors' reaction to the latest US jobs report, China's efforts to prop up its economy, and the Philippine August inflation print,' he said.
On the US economy, he said traders may bet on 'bad news is good news' as a softening US labor market, which saw a rise in unemployment to its highest since February 2022. This makes the case for the Federal Reserve to hold policy rates steady this month.
However, it would be domestic inflation data for August that will be top of mind for most investors.
'The expectation is that this will be higher than July's 4.7 percent, but a steep jump could introduce fresh volatility to the market,' Colet said.
As for outside factors, market participants will also have their eyes on China, where the government is trying to manage a property crisis and a broader economic slowdown.
Copyright © 2022 PhilSTAR Daily, Inc Provided by SyndiGate Media Inc. (Syndigate.info).