Analysts said stock prices could rise this week, based on gains attributed to upbeat economic news such as stronger-than-expected Philippine growth and slowing inflation in the United States.
The main Philippine Stock Exchange (PSEi) index on Friday closed higher, adding 119.2 points, or 1.93 percent, to 6,286.77. And all the broader shares jumped 1.56 percent, or 51.23 points, to settle at 3,328.89 points.
“We are seeing the bullish state of the domestic market build up on the back of the following positive factors: robust economic growth for the Philippines in the third quarter (Q3), strong corporate results in the third quarter, the strengthening of the peso and a slowdown in the Philippines’ strong economic growth in the third quarter, said Japhet Tantiangkou, senior research analyst at Philstocks Financial Inc., The inflation in the United States.
“This week, the local stock exchange may extend its rally against the background of the above factors. However, downside risks remain, primarily inflation in the Philippines.”
The results of the Monetary Board’s monetary policy meeting on Thursday are expected to affect the market as well. While the outcome – a 75 basis point adjustment – has already been telegraphed, Tantiangco said investors will be looking for clues about how to expect inflation to move and indications on how to adjust policy further.
He added that OFW remittances and balance of payments data may also play a role.
Tantiangco said that on the chart, market support will be in the 6000-6100 range, with immediate resistance at 6400.
Meanwhile, online broker 2TradeAsia said lower inflation in the US could signal the Federal Reserve to order a less aggressive 50 basis point interest rate hike next month.
“Expectations should be tempered, however, as depending on how inflation moves there could be potential to proceed smoothly,” she said in a report.
Back home, “With BSP due to be paid for another round of interest rate hikes, future 3-6 month corporate cash flows are likely to be more predictable given that capital costs are moderate,” 2TradeAsia said.
She added that investors should keep in mind that going into 2023 global capital will be more selective and yield-driven, and that it all boils down to asset quality.
2TradeAsia said the stock market could find immediate support at 6,100 and resistance at 6,400-6,600.
Michael Rycafort, chief economist at Rizal Commercial Banking Corp, who said China’s easing of some Covid restrictions could also continue to lift the market, placed immediate resistance at 6300-6400 and immediate support at 6,249-6271.