Investors focus on earnings, BSP meeting


Share prices are expected to move sideways this week after last week’s bargain hunting as investors focus on the upcoming monetary policy meeting.

After a higher-than-expected January inflation rate, investors are curious on the next action of the Monetary Board during its meeting scheduled Thursday.

Most analysts expect the Bangko Sentral ng Pilipinas to keep the current policy rates, although a possible rate hike is not far-fetched if the inflation rate surpasses the government’s target.

The government on Friday reported the January inflation rate quickened to two-year high of 4.2 percent, topping the government’s target of between 2 percent and 4 percent this year. The significant jump in inflation rate was largely due to higher food and and transport costs.

BSP Governor Benjamin Diokno, however, said the projected uptrend in inflation rate was just temporary.

Investors will also be monitoring the earnings report of listed companies.

Most listed firms are expected to report lower 2020 earnings because of the impact of the pandemic. Analysts said investors will be looking at earnings guidance and outlook from companies for this year as the economy starts to recover.

“The PSEi showed a tong return to the 7,000 level but its staying power will be tested given heightened volatility from the upcoming earnings season when capex spending and earnings per share recovery stories for the year are affirmed,” online brokerage firm 2TradeAsia.com said.

“Amid period of rising consumer prices, recall that the best bets tend to be natural hedges and those that can pass on the input cost burden to consumers,” it added.

The Philippine Stock Exchange Index last week jumped 406 points to 7,019, up 6.2 percent week-on-week, despite the higher January inflation rate.

All sub-indices ended in the green, led by mining and oil which rose 7.6 percent, property which climbed 6.8 percent and industrial which advanced 6.1 percent.

The average value turnover declined to P9.95 billion while the average net foreign selling eased to P530 million.

Wall Street stocks, meanwhile,  scaled new heights Friday as a lackluster US jobs report was seen as bolstering the case for US President Joe Biden’s $1.9-trillion stimulus plan.

The S&P 500 and the Nasdaq ended at records for a second straight day following the jobs data. Analysts also cited progress on coronavirus vaccines as a factor in extending the rally.   

The closely-watched jobs data showed the unemployment rate dropped to 6.3 percent in January but the economy added only 49,000 jobs, the Labor Department said.

Stephen Innes, chief global markets strategist at Axi, called the report a “double clunker” as the December figure was revised to show a loss of 227,000 jobs from an initial estimate of 140,000.

Biden argued the data show the need for speedy relief.

“I see enormous pain in this country, a lot of folks out of work, a lot of folks going hungry,” the US president said in a White House speech.

“I believe the American people are looking right now to their government for help… so I’m going to act. I’m going to act fast.” With AFP

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