Stock market weighs rising inflation rate

Share prices should move sideways this week as concerns about rising inflation and a possible rate hike continue to weigh on the market. Analysts said investors were concerned about the rise in the rate of inflation, which could continue early next year due to high oil prices and global logistics problems, despite Bangko Sentral ng Pilipinas leaving rates unchanged last week to support domestic economic growth. Mark Angeles, head of equity research at First Metro Investments Corp., said in a recent forum that inflation and interest rate risks are the main concerns of investors. While the current high rate of inflation is temporary, Angeles said the rate of inflation could continue to rise once the economy begins to reopen. Consumer revenge spending can also contribute to higher inflation. “The rate of inflation could settle above the range set by GNP for the next year,” said Angeles. The GNP on Thursday maintained its inflation forecast for 2022 of 3.3 percent and lowered the target for 2021 slightly from 4.4 percent to 4.3 percent. The 30-company Philippine Stock Exchange Index fell 1.4 percent last week to 7,280.57. All major indicators ended negatively, led by mining and oil (-3.9 percent), financials (-2.2 percent), holding companies (-1.3 percent) and real estate (-1.3 percent). The service and industrial sectors also fell 1.18 percent and 1.1 percent, respectively. Foreign investors were net sellers for the week by 1.7 billion pesos, while the average daily value hit 10.9 billion pesos compared to the previous week’s average of 9.3 billion pesos. Weekly top winners were Monde Nissin Corp., which rose 6.6 percent to 18.08 p., AREIT Inc., which rose 6.1 percent to 47.75 p., And Globe Telecom Inc., which rose by 5.9 percent climbed to P3.630. Weekly top price losers were DITO DME Holdings Corp., which fell 18.5 percent to 5.16 P., Converge Information and Communications Technology Solutions Inc., which lost 11.9 percent to 31.25 P., and Nickel Asia Corp., which fell 9.8 percent to P5. 02. Meanwhile, European stocks fell along with the euro on Friday as Austria announced a new partial lockdown to try to contain the rising COVID cases, which also caused heavy losses in oil prices. The latest COVID-19 rules in Austria and more limited moves in Germany have put pressure on US markets, despite the Nasdaq reaching all-time highs due to its strength in technology stocks. The restrictions in Austria begin on Monday and the vaccination against COVID-19 in the euro state will be mandatory from February, said Federal Chancellor Alexander Schallenberg. Fawad Razaqzada, a market analyst at ThinkMarkets, warned against a “short-term correction as investors become aware of the risks to the eurozone economy” despite the prospect of a weaker euro, which will boost exports. “It’s not necessarily about Austria,” he said, referring to “concerns that similar lockdown measures could be introduced in other parts of Europe”. The London, Paris and Frankfurt stock exchanges all fell, with travel companies particularly hard hit as British Airways lost six percent, or around £ 400 million, of the airline’s market cap. Oil prices fell and the benchmark contract for Brent North Sea oil fell about three percent to below $ 80 a barrel. With AFP

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