Market to stay cautious before PHL GDP report

INVESTORS are expected to take a cautious stance this trading week as they await the release of fourth quarter and full-year 2023 Philippine gross domestic product (GDP) data.

The Philippine Stock Exchange index (PSEi) rose by 12.59 points or 0.18% to end at 6,686.09 on Friday, while the broader all shares index climbed by 0.42 point or 0.01% to close at 3,508.61.

Week on week, the PSEi went up by 182.55 points or 2.81% compared to its 6,503.54 close on Jan. 19.

“The local bourse resumed its upward trend, banking on regional markets’ strength supported by China’s stimulus measures and higher-than-expected US GDP in the fourth quarter of 2023,” online brokerage 2TradeAsia.com said in a report. 

The US economy grew faster than expected in the fourth quarter amid strong consumer spending, and shrugged off dire predictions of a recession after the US Federal Reserve aggressively raised interest rates, with growth for the full year coming in at 2.5%, Reuters reported.

Gross domestic product increased at a 3.3% annualized rate last quarter after advancing at a 4.9% pace in the third quarter, the Commerce department’s Bureau of Economic Analysis said. Economists polled by Reuters had forecast GDP rising at a 2% rate.

Growth last year accelerated from 1.9% in 2022, and was the fastest in two years.

For this week, the market may stay cautious before the release of Philippine GDP data on Wednesday, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message

“Investors are expected to watch out primarily for our fourth quarter and full-year 2023 GDP data. Investors may also continue to watch out for clues with respect to the outlook of our country’s inflation and interest rates,” Mr. Tantiangco said.

“The record high performances in Wall Street, if they continue, are expected to give the market a boost. However, the current weakness seen in the local currency, if sustained, may weigh on the local bourse,” he added.

Any discussions about an interest rate cut during the Fed’s policy meeting this week could also affect the local market, China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“Amidst a slew of economic data and month-end trading, the market is likely to react mainly to the Philippines’ fourth quarter GDP growth print and, more crucially, the remarks of Federal Reserve Chair Jerome Powell after US central bankers conclude their policy meeting on Wednesday,” Mr. Colet said.

“Any indication of a US rate cut as soon as March or May this year could fuel bullish bets and propel our market higher. Conversely, any erosion in the probability of an early dovish pivot in US monetary policy could lead to further market consolidation,” he added.

2TradeAsia.com put the PSEi’s immediate support at 6,500 and resistance at 6,700-6,800. — R.M.D. Ochave with Reuters