Philippine Market Outlook Sept 6, 2018

MARKET OUTLOOK

Stocks suffered a bloodbath during Wednesday’s trading after August inflation figures ended much higher than expected.
The Philippine Statistics Authority reported Wednesday, September 5, that headline inflation accelerated to 6.4% last August, faster than July’s 5.7%. This is the highest figure recorded since inflation shot up to 6.6% in March 2009.

The August inflation reading beat all market estimates, including the central bank’s estimate range of 5.5% to 6.2%, as well as the Department of Finance’s 5.9%.

Analysts are now expecting another rate hike from the central bank to curb inflation.

Unfortunately, bearish sentiment is expected to persist at least for the remainder of the week, as investors will still digest the components of the latest CPI (consumer price index) numbers, as well as gradually factor in the implications.

Adding to the pressure, with concerns over trade simmering, Commerce Department data showed that the U.S. trade deficit hit a five-month high in July, which economists said could heighten the White House's resolve to aggressively pursue an "America First" approach to trade.

The data comes amid concerns that a U.S. proposal to impose tariffs on $200-bil more in Chinese imports could go into effect soon after a public comment period ends on Thursday, even as the U.S.-Canada talks to renegotiate the North American Free Trade Agreement continue.