Market volatile ahead of inflation report

Manila, Philippines - The Philippine stock market is anticipated to remain unpredictable this week due to growing concerns over inflation. The Philippine Stock Exchange index (PSEi) failed to gain any ground last week, closing at 5,629.03 points, marking a 3.38 percent decline from the previous week. Wendy Estacio-Cruz, head of research at Unicapital Securities, explained that the PSEi's streak of losses has now extended to five sessions.

Her team believes that sustained recovery will depend on reducing inflationary pressures and receiving clearer indications of growth improvement. Investors are now eagerly awaiting this week's September inflation report, with the Bangko Sentral ng Pilipinas (BSP) forecasting inflation rates to range between 6.4 percent and 7.4 percent, surpassing the previous month's 6.1 percent and bolstering the argument for another rate increase.

Cristina Ulang, head of research at First Metro Investment Corp., added that the market's trajectory will primarily be influenced by the persistent inflation and the expected hawkish stance of the BSP. She predicted that the PSEi would trade within a narrow range, remaining almost flat unless bolstered by positive geopolitical developments.

Online brokerage 2TradeAsia.com also anticipates market sentiment to align with the official September inflation data. They believe that if the inflation figure exceeds the estimated range, it could reinforce predictions for a rate hike on October 22 and potentially challenge the 5,500 support level. Overall, the brokerage recommends maintaining a cautious stance on risk, as equities are unlikely to experience significant momentum above 6,000 points, especially with fixed income options being more alluring.