Cautious trading seen as recession fears linger

PHILIPPINE SHARES may see volatile trading this week as the peso remains weak against the dollar amid lingering recession fears as global central banks continue to raise rates to combat inflation.

The Philippine Stock Exchange index (PSEi) inched up by 12.26 points or 0.18% to close at 6,606 on Friday, while the broader all shares index rose by 1.27 points or 0.03% to 3,506.47.

Week on week, the PSEi declined by 146.5 points or 1.29% from its close of 6,752.50 on Sept. 2.

“Profit taking prevailed after hawkish Fed remarks supported another 75 bps (basis points) hike,” online brokerage 2TradeAsia.com said in a report.

“Philippine shares ended the week above 6,600 equities as traders digested further Fed Chair Jerome H. Powell’s latest comments on inflation,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Mr. Powell on Thursday said the US central bank is “strongly committed” to fighting inflation.

“We need to act now, forthrightly, strongly as we have been doing, and we need to keep at it until the job is done,” Mr. Powell said in a webcast interview with Cato Institute President Peter Goettler.

The Fed will hold its next policy meeting on Sept. 20-21, where markets expect another aggressive hike.

The US central bank has raised benchmark rates by 225 bps since March, including back-to-back 75-bp hikes in June and July, amid rising prices.

For this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said peso-dollar trading will affect the stock market’s performance.

“A continuation of [peso’s] recovery momentum is seen to boost sentiment in the stock market. A depreciation is expected to lead to otherwise, however,” Mr. Tantiangco said in a Viber message.

“Lingering worries over the recession risks in the US and in Europe may continue to weigh on the market,” he added.

The peso closed at P56.82 per dollar on Friday, rebounding by 36 centavos from its P57.18 finish on Thursday, data from the Bankers Association of the Philippines’ website showed.

This followed a six-day decline that saw it logging new record lows for five straight sessions.

Mr. Tantiangco said investors will watch out for upcoming data on overseas Filipino workers remittances, foreign direct investments, and balance of payments.

Meanwhile, Mercantile Securities Corp. Head Trader Jeff Radley C. See said: “The market will rally and may visit the resistance levels as investors are gaining confidence that the economy is stable.”

“Recession fears are slowly fading as well. We expect consumer and financial sector rally,” Mr. See said.

Online brokerage 2TradeAsia.com said the market may remain range-bound in the coming days.

It put the PSEi’s support at 6,500 and resistance at 6,900, while Mercantile Securities’ Mr. See placed support at 6,500 and resistance at 6,750 and 6,900. — Justine Irish D. Tabile