U.S. rate effect, weak peso to soften mart

Aggressively hawkish policy outlook of the Federal Reserve is still expected to weigh on the local market next week

September 5, 2022

The double whammy of higher United States rates and a weakening Philippine peso might still take its toll on the performance of the local market next week.

Japhet Tantiangco, research manager at Philstocks Financials Inc., said investors are still weighing on the consequences of the policy outlook of the Federal Reserve.

“The aggressively hawkish policy outlook of the Federal Reserve is still expected to weigh on the local market next week, especially if the rise in US interest rates and the decline in Philippine Peso continues,” Tantiangco said in a text message on Sunday.

“At the same time, the local market is expected to take cues from the upcoming economic data next week, primarily from our August inflation data,” he added.

Price pressure remains

Tantiangco likewise pointed out that the market’s behavior will be heavily influenced by the announcement of August inflation. A slowdown in inflation will boost investors’ sentiments while a further increase will drag down their optimism.

“Investors are also expected to watch out for our July labor market figures for clues on the strength of the local economy,” he said.

The Bangko Sentral ng Pilipinas said last week the inflation for August will likely settle between 5.9 to 6.7 percent after it accelerated to 6.4 percent in July, from 6.1 in June due to a spike in food prices.

Chart wise, the local market’s support is seen at 6,600. Its immediate resistance is seen at its 200-day exponential moving average. As of 2 September, it was at 6,734.81.

The Philippine Stock Exchange index closed last week at 6,692.65, up by 104.37 points, despite weak market participation.

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