Bearish sentiment expected to continue

Analysts are predicting the local stock market will be bearish this week as the Philippine Stock Exchange Index is down 114 points, or 1.8 percent, for the third week in a row, from 3 percent the previous week.

According to Philstock Financial Inc. Senior Analyst at Japhet Tantiangco, the current bearish sentiment is expected to put pressure on the broader market amid various downside risks remaining.

“Remaining risks include a weakening peso already approaching 55 pesos to the US dollar, rising risks of rising inflation and the possibility of a global economic downturn amid the risk of a US recession and the ongoing Russian-Ukrainian war. the market has been declining for three consecutive weeks, next week’s trading may see bargain-hunting episodes. Next week, investors may also look to the upcoming Global Manufacturing PMI (Purchasing Managers’ Index) of the Philippines to get an idea of ​​the local economy, ” he said.

Tantiangco sees immediate market support in the 6,100-6,150 range, with immediate resistance seen in the market’s 10-day exponential moving average of 6,308.05 as of June 24, 2022.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael Ricafort and 2TradeAsia explained that Bangko Sentral ng Pilipinas (BSP) raised the key local discount rate again at the second consecutive meeting on June 23, 2022 by 0.25 basis points to 2.50 percent, another 0.25 basis points. A targeted increase in the interest rate in August 2022 is likely to eliminate excess liquidity in the economy, which is also a factor in inflation.

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Ricafort said 6000 would be the immediate support and 6500 would be the resistance.

Meanwhile, 2TradeAsia also took note of the revised central bank inflation expectations: “The BSP has also revised inflation expectations to average 5 percent in 2022 (from 4.6 percent earlier) and only slightly improve in 2023, with the index expected to consumer prices will be established. by 4.2 percent. A gradual increase going forward plus further tightening in 2023 is largely implied by this move and the market has abandoned transitional inflation rhetoric in favor of aggressive monetary policy to slow price increases as soon as possible.”

2TradeAsia sees immediate support at 6000 while resistance lies between 6300 and 6400.