Market Observer

Major stock indices rose due to a muted increase in consumer prices

Philippine Stock Exchange ended lower on fears of a tighter lockdown.

FWD Investment Team

The government has announced its strategy of restricting mobility in certain cities that are experiencing a surge rather than the whole Metro Manila to soften the blow on the economy.

Global Stocks climbed after economic data showed that key inflation gauge rose 0.4% last month, in line with expectations. This may help ease concerns that a sharp increase in inflation would prompt the

Federal Reserve to tighten monetary policy. The technology sector led the recovery as investors appeared to bargain-hunt on stocks that have been beaten down over the past several weeks. Bond yields, whose rise in recent weeks had pressured lofty valuations in the technology sector, pulled back slightly. The stabilization in bond markets helped tech shares recoup some of their losses. MSCI +0.53% week-on-week, +3.10% year-to-date.

Philippine stocks ended the week of March 8 lower due to fears of tighter lockdown restrictions amid a spike in COVID-19 infections. The government has announced its strategy of restricting mobility in certain cities that are experiencing a surge rather than the whole Metro Manila to soften the blow on the economy.

There was a slight recovery on March 10, brought about by positive news from the global market. Buyers picked up shares of companies that took a beating at the beginning of the week, but negative sentiment still seems to be more prevalent amid the unchanged unemployment rate, the spike in inflation, and daily COVID-19 cases. Furthermore, Philvolcs raised the alert level status of Taal Volcano after 28 volcanic tremors and four low-frequency volcanic earthquakes in the past 24 hours, this may also heighten investors’ fears. PSEi -1.94% week-on-week, -4.64% year-to-date.

Philippine bond yields curve steepened further, with the long end pushed higher by inflation risk. National Treasurer Rosalia V. De Leon said the higher rates were expected as levels from the secondary market climbed in tandem with inflation, higher oil prices and US treasuries with optimism on US President Biden’s stimulus package.

Bond traders think that the market is quite defensive at the moment. With CPI (consumer price index) outlook becoming worrisome and no strong appetite for longer tenors. Meanwhile, the government is looking to borrow P3 trillion this year from local and foreign lenders to help fund its budget deficit that is seen to hit 8.9% of gross domestic product.

 

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