PHL shares may move sideways before US data

PHILIPPINE STOCKS may continue to move sideways as the market awaits the release of August US consumer and producer inflation data, which could provide more support to growing expectations of a US Federal Reserve rate cut this month, especially following the soft jobs reports released last week.

On Friday, the Philippine Stock Exchange index (PSEi) rose by 0.69% or 42.21 points to close at 6,149.13, while the broader all shares index went up by 0.4% or 14.79 points to 3,692.71.

Week on week, however, the PSEi went down by 6.44 points from its close of 6,155.57 on Aug. 29.

“Higher yet manageable August inflation and positive signs for Fed easing in September kept the PSEi above the 6,100 zone despite a frail start during the week,” online brokerage 2TradeAsia.com said in a market note.

“The market ended in the green, … supported by sustained buying pressure as investors continue to take advantage of relatively attractive prices. Moreover, the latest inflation report looks like it was received positively, coming in within the BSP’s (Bangko Sentral ng Pilipinas) target range and boosting sentiment,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Headline inflation picked up to 1.5% in August from 0.9% in July, but was slower than the 3.3% recorded in the same month a year ago, the Philippine Statistics Authority reported on Friday.

This was slightly higher than the 1.3% median estimate in a ����ý poll of 16 analysts but was within the central bank’s 1%-1.8% forecast for the month.

For the first eight months, inflation averaged 1.7%, matching the central bank’s forecast for this year.

Meanwhile, US job growth weakened sharply in August and the unemployment rate increased to nearly a four-year high of 4.3%, confirming that labor market conditions were softening and sealing the case for a US Federal Reserve interest rate cut later this month, Reuters reported.

Nonfarm payrolls increased by only 22,000 jobs last month after rising by an upwardly revised 79,000 in July, the Labor Department’s Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast payrolls would rise by 75,000 jobs after a previously reported gain of 73,000 in July.

Financial markets expect the Fed will deliver a quarter-percentage-point rate cut at its Sept. 16-17 policy meeting, with two more such moves at its remaining two meetings in 2025. The central bank has kept its benchmark overnight interest rate in the 4.25%-4.5% range since December.

For this week, the market’s focus will be on the US inflation reports as these could pave the way for a Fed cut at next week’s review, 2TradeAsia.com said. It put the PSEi’s immediate support at 6,200 and resistance at 6,500.

Mr. Limlingan said markets are consolidating before the Fed’s meeting next week. “Markets are clearly rallying beneath the surface of shifting policy expectations and positioning.” — AGCM with Reuters