PH stocks face headwinds amid US worries

Signs of a slowdown in the American economy is expected to sour investor sentiment regarding local stocks, signaling a potential sell-off after booking some recent gains.

Philstocks Financial Inc. senior analyst Japhet Louis Tantiangco said the Philippine Stock Exchange index (PSEi) might see some bargain-hunting but investors were on the lookout for the developments in the US economy.

“The worries over the health of the US’ economy is seen as a headwind for the bourse,” he said.

Fresh economic data showed a decline in manufacturing activities in the US, reflecting a weaker demand in consumption. The unemployment rate also grew to 4.3 percent in July, which was nearly a three-year high for the economic superpower.

On the local front, Tantiangco said that investors had cheered for the easing of inflation.

“The latest inflation figures are seen to strengthen the case for the continuation of the BSP’s (Bangko Sentral ng Pilipinas) monetary policy easing. This in turn is seen to drive optimism in the market,” he explained.

Inflation declined to 3.3 percent in August from 4.4 percent in July, according to the Philippine Statistics Authority. The latest print is also lower than 5.3 percent readout in August last year.

During the latest monetary policy meeting, the BSP cut the key interest rate by 25 basis points to 6.25 percent, citing the weakening outlook for inflation.

“Also, the local currency has recently exhibited appreciation against the US dollar. If this continues next week, it is also expected to give the market a boost,” Tantiangco said.