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Cautious trade seen among investors

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ANALYSTS are seeing cautious trading this week after the Philippines Stock Exchange Index (PSEi) gained 18.98 points, or 0.28%, last Friday to end the week at 6,699.66.

Investors are also waiting for the next rate setting meeting of Bangko Sentral ng Pilipinas on August 18, 2022.

Investors expect the central bank to adopt a 25-50 basis point rate hike to curb inflation, but Rizal Commercial Banking Corp. chief economist Michael Ricafort said it could also be toned down due to domestic GDP of 7.4% in the second quarter. product (GDP) growth.

According to 2TradeAsia, given recent GDP, inflation and its impact on corporate value chains is the obvious driver, but as also mentioned last week in their report, the real impact at the consumer level is likely to be Being more is felt towards the end of the year when retail prices fully reflect the inflation of intermediate consumption costs and when the consumption behavior of households accommodates a rise in costs.

“Wild cards will be consumer-level demand tending to be more inelastic towards the holidays, supportive remittances, and a possible slowing of rate hikes by the Federal Reserve if US inflation ends up moderating sooner than expected. “, says the 2TradeAsia report. “The main challenge for most companies is to maintain momentum for the second of the year due to the absence of extraordinary government spending. The key is to recognize the industry drivers that will fuel the excitement for the third and fourth quarters of the year in terms of their impact on cash flow.

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2TradeAsia sees immediate support at 6,450, while resistance is at 6,830, indicating that it remains to be seen if the market has enough momentum to trade in a range closer to the 7,000 mark.

Ricafort also said recent gains in the PSEi were due to generally better economic data for the Philippines; The US markets are also gaining positive sentiment with their inflation rate standing at 8.5%; better outlook for the US market for July; the healthy upward correction in global crude oil prices; and slower-than-expected consumer and producer prices in China.

Ricafort expects resistance at the 6,800-6,900 levels and further upside potential at the 7,000 levels, while immediate support is seen at the 6,400-6,500 levels.