Inflation expectations ahead of the release of the February consumer price index data and the developments in the local coronavirus disease 2019 (Covid-19) vaccine roll out are expected to drive the market this week.
Philstocks Financial Inc. senior research analyst Japhet Tantiangco sees a downward bias for the main index amid elevated inflation expectations.
He continued that it has gained support from the Bangko Sentral ng Pilipinas’ range projection of 4.3 to 5.1 percent, which is above the government’s target.
“A surge in inflation is seen to aggravate the situation of our struggling economy, which is still trying to recover from the pandemic-induced recession,” Tantiangco explained.
Data from the Philippine Statistics Authority showed that the country’s inflation rate picked up to 4.2 percent in January from 3.5 percent in December due to higher food and beverage prices.
Tantiangco added that investors will also be monitoring the bond yields in the US, which has been concerning global equity markets recently.
“A further rise in the yields may result in more foreign fund outflows from our local market, which in turn will add to the downward pressure,” he said.
Meanwhile, positive developments in the country’s Covid-19 vaccine obtainment and roll out might help tilt the local bourse to the upside, according to Tantiangco.
Tantiangco sees the market’s support at 6,600, while resistance is at 6,900.
Last week, last-minute buying allowed the bellwether Philippine Stock Exchange index to climb 0.58 percent or 38.91 points to close at 6,794.86 on Friday.