Philippine Market Outlook April 05, 2019

MARKET OUTLOOK

Local shares dropped on Thursday as investors stayed on the sidelines ahead of the release of inflation data on Friday.

The Philippine Statistics Authority yesterday revised Q4 GDP (gross domestic product) higher to 6.3% from 6.1%. Today will be the announcement of inflation rate. Some investors are waiting for these catalysts to go back to the bullish market.

A poll of economists yielded a 3.5% median for the headline inflation rate for March. If realized, this will be slower than February’s 3.8% pace and the 4.3% rate seen in March 2018. The poll result also falls within the 3.1% to 3.9% estimate range given by the central bank last week.

Inflation has so far averaged 4.1% in 2019, slightly above the central bank’s 2% to 4% target range for the year.

The market’s performance was generally due to cautious investor sentiment.

The market continues to trade sideways on low volumes. The general investor sentiment remains cautious. Expect the index to be closer to 8,000 as inflation numbers are to be released today.

U.S. President Donald Trump said on Thursday a trade deal with China was getting very close and could be announced in about four weeks, but warned it would be difficult to let China keep trading with the United States if remaining issues were not resolved.

Speaking to reporters at the White House at the start of a meeting with Chinese Vice Premier Liu He, Trump said some of the tougher points of a deal had been agreed but there were still differences to be bridged.

Trump declined to say what would happen to U.S. tariffs on $250 billion worth of goods as part of a deal.

U.S. Trade Representative Robert Lighthizer said there were still some "major, major issues" to resolve and that Liu's commitment to reform in China was encouraging.

Trump said the sticking points included tariffs and intellectual property theft. He said he would discuss tariffs with Liu in their meeting.

Washington wants sweeping changes to China's economic and trade policies, while Beijing wants Trump to lift expensive sanctions on Chinese goods.

After meetings in Beijing last week, Lighthizer and Treasury Secretary Steven Mnuchin are holding talks in Washington with Liu and a Chinese delegation this week.

Hopes that the talks were moving in a positive direction may continue to cheer financial markets.