Inflation, other data could lift sentiment

ECONOMIC data releases due this week could boost investor sentiment and lift the stock market, analysts said.

The benchmark Philippine Stock Exchange index (PSEi) closed the first, albeit shortened, trading week of 2025 at 6,603.81, up 1.14 percent from its end-2024 close of 6,528.79.

The Philippine Statistics Authority will release December inflation results, along with November manufacturing output data, tomorrow and will follow this up with November jobs and preliminary trade figures on Jan. 8 and 9, respectively.

Analysts said that investors would also be looking at how the peso, which returned to a record lows of P59 to the dollar three times before 2024 ended, would continue to fare.

The currency, which opened the year at P57.91:$1. on Jan. 2, closed lower last Friday at P58.2 to the greenback.

Unicapital Group research head Wendy Estacio-Cruz said the PSEi could range from 6,300 to 6,800 this week “with a bias on the upside.”

Other analysts said that immediate support would be at 6,400-6,500, with resistance at 6,700-6,800.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the PSEi had seen a “healthy upward correction” after declining for most of the last two months of the year due to fears of protectionist policies under US President-elect Donald Trump.

Better-than-targeted foreign investment approvals and higher foreign portfolio investments, along with statements from the Bangko Sentral ng Pilipinas (BSP) governor that a rate cut would likely be announced during the year’s first policy meeting, had also buoyed the market.

Philstocks Financial Inc. research manager Japhet Tantiangco said the market had gained during five of the last six trading days and “also managed to get past its 10-day exponential moving average which has been considered as a dynamic resistance.”

Trading, however, remains “thin, implying tepid conviction.”

“Also, the market is still operating under a newly-formed death cross which signals possible downtrend in the medium to long run,” Tantianco said as he advised investors to remain cautious.

A death cross, where the short-term moving average drops below the long-term one, is an indication of a bearish market.

For this week, Tantiangco said “eyes are going to be on the Philippines’ December inflation data as this will provide clues on the BSP’s policy outlook.”

A result within the central bank’s 2.3- to 3.1-percent estimate, especially one at the lower end, could give sentiment a boost.

“Investors are also expected to look forward to the country’s November 2024 labor force survey for clues on the strength of the local economy,” Tantiangco said.

A further appreciation of the peso, he continued, may also help lift the market.

Online brokerage 2TradeAsia, meanwhile, said that “cloudy with a chance of rain” was the theme of the last few weeks of 2024 and that “markets went into 2025 with umbrellas out and risk aversion at full mast.”

It said the year was set against a backdrop of numerous macro uncertainties, but with excellent valuations at the corporate level.

“As such, a lot of the central themes for this year are likely sector-locked and/or story-specific to preserve returns amidst swings in the macro,” 2TradeAsia added.

“Defensiveness with resilient topline drivers and little inflationary and currency risks should garner attention; value plays in banking, consumer, and power are underscored given abundant upside risks especially in best case growth scenarios,” it continued.

“A probable bump in growth in [second quarter] due to critical midterm elections should provide excitement in the news cycle, while the latter half of the year is expected to be shaped by central bank’ rate adjustments (or lack thereof) depending on macro forces at play by then,” it continued.

The firm advised investors to range-trade in the near term, adding “pessimism can be profitable.”