US inflation, BSP action on investors' radar this week in Philippines

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The stock market will attempt to sustain its momentum this week as investors look to get inspiration from upcoming US economic data and the policy rate-setting meeting of the Bangko Sentral ng Pilipinas (BSP).

The benchmark Philippine Stock Exchange index (PSEi) finished last week's holiday-shortened week unscathed, extending its winning streak to a fifth straight session.

China Bank Capital Corp. managing director Juan Paolo Colet said the market has had a good run so far, but it is expected to face increased pressure to consolidate below the psychological resistance at 7,000.

He said this week's key events that will influence overall market direction are the release of US January consumer price index data and the outcome of the BSP's monetary policy meeting.

'The BSP is very likely to keep its policy rate unchanged while maintaining a hawkish tone in view of upside risks to domestic inflation. Given that many market participants do not expect the BSP to cut rates ahead of the US Federal Reserve, investors will pay close attention to how this week's US inflation print will feed into the timing of a dovish shift in US monetary policy,' Colet said.

After closing at 6,850.16 last Thursday, the PSEi has so far gained for the third straight week, and was higher for almost all weeks since the start of 2024, according to RCBC chief economist Michael Ricafort.

He said the PSEi continued to climb amid net foreign buying at the local stock market for most trading days since the start of the year.

Moving forward, he said any sustained breach above 6,800 levels could lead to further upside potential towards the 7,000 levels in the coming weeks or months.

Ricafort sees immediate minor support levels at 6,540 to 6,690, while immediate major support is at the 6,310 to 6,430 levels, which he said help keep intact the underlying upward momentum over the past three months.