By Revin Mikhael D. Ochave, Reporter

EXPECTATIONS that inflation could have slowed to a more than five-year low in May, which could make the case for further policy easing, could spur Philippine stocks next week, analysts said.

“Investors are expected to watch out for the Philippines’ May inflation print as this would give clues on the Bangko Sentral ng Pilipinas’ (BSP) policy direction,” Japhet Louis O. Tantiangco, a senior research analyst at Philstocks Financial, Inc., said in a Viber message at the weekend.

“A low inflation print, particularly one below the central bank’s 2%-4% target, could boost market sentiment because this would imply that the BSP could continue with its policy easing,” he added.

The Philippine Statistics Authority will release May inflation data on Thursday.

On Friday, the bellwether Philippine Stock Exchange Index (PSEi) dropped 1.11% or 71.28 points to 6,341.53, while the broader all-share index slipped 0.78% or 29.48 points to 3,723.62.

The PSEi retreated for the second straight week, dropping 1.12% or 71.57 points.

“The local market extended its losses last week under anemic trading, reflecting weak investor confidence amid the lingering global uncertainties and the lack of a positive catalyst,” Mr. Tantiangco said.

Inflation likely eased to an over five-year low of 1.3% last month, according to a median estimate of 17 analysts in a BusinessWorld poll last week, slower than 1.4% in April and 3.9% a year earlier and within the BSP’s 0.9%-1.7% forecast.

BSP Governor Eli M. Remolona, Jr. had hinted of two more 25-basis point cuts this year, with the next reduction on the table as early as June 19.

He added that easing inflation provides “plenty of room” for further easing, although they don’t want to cut “too much” to avoid stoking prices.

In April, the Monetary Board slashed benchmark interest rates by 25 bps to 5.5%.

Mr. Tantiangco said the scheduled releases of Philippine manufacturing data on June 2 and labor market figures on June 6 could also give investors clues on the local economy’s condition.

“Investors are also expected to watch out for developments on the global trade front,” he said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., put the PSEi’s next minor support at 6,290 to 6,300 points and immediate resistance at 6,500.

Online brokerage firm 2TradeAsia.com put immediate support at 6,300 and resistance at 6,500 to 6,550.

“The PSEi continues to struggle sustaining momentum above 6,500 — a level that has repeatedly acted as a technical ceiling in recent weeks,” it said in a note. “With crosscurrents in global trade policy and central bank posture clouding short-run conviction, a more surgical approach to positioning is suggested.”

“Favor liquidity, be selective in adding exposure and lean into names with either fiscal tailwinds or self-funded growth. Until macro visibility improves, treat rallies as chances to recalibrate, not chase,” it added.

Mr. Tantiangco estimated market support at 6,150 points and resistance at 6,400.