Rate hike bets, rising oil prices to test PSEi
Philippine stocks could face renewed pressure this week as investors weigh the prospect of another interest rate hike against rising oil prices and a weaker peso, according to F. Yap Securities Inc.
In its outlook for Oct. 12 to Oct. 16, the brokerage urged investors to remain selective ahead of third-quarter earnings and the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on Oct. 22.
The benchmark Philippine Stock Exchange Index (PSEi) ended on Friday at 5,700.99, up 1.61 percent for the session as bargain hunting lifted all sectors.
But inflation remains a concern.
September’s headline rate accelerated to 7.2 percent from 6.1 percent in August, while core inflation climbed to 4.7 percent from 4.1 percent.
F. Yap expects a 25-basis-point increase in the BSP’s policy rate, although it said a larger, 50-basis-point adjustment had become a more plausible risk.
The brokerage also warned that September’s fare increases could add pressure to October inflation.
Higher oil prices and US Treasury yields could further weigh on sentiment.
The report noted that Brent crude was near $104 a barrel on Thursday, while the US 10-year Treasury yield had climbed above 5.35 percent.
F. Yap said higher US yields could draw foreign funds away from the region and weaken the peso, leaving the BSP with less room to delay tightening.
Investors will also watch US inflation data this week.
Stronger readings could push yields higher and put the PSEi’s 5,550 support level under pressure, the brokerage said.
Foreign investors remained net sellers of Philippine shares last week, although outflows eased to P1.30 billion from P4.57 billion the week before.
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