Stocks seen sideways as market looks to earnings

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THE Philippine Stock Exchange index (PSEi) is seen to stabilize at 8,300 this week, but may rally towards above 8,600 depending on the earnings results of the big players.

The index reached the 8,600 level intraday on Friday but failed to maintain the rally. It closed at 8,376.13, dropping 139.89 points or 1.64%.

Last week’s close was also higher than the PSEi’s 8,295.95 finish last Oct. 27.

Regina Development Capital Corp. said the drop in the index after a rally that was “too strong” was caused by consolidation.

“This we attribute to the normalization after a catch-up on account of a long holiday,” Regina Capital said in its weekly outlook and recommendation.

“We now have established a range trade between 8,300 and 8,600, still depending on how institutional players will move.”

Big players will release their nine-month results this week, including Ayala Corp., Metro Pacific Investments Corp. (MPIC), PLDT, Inc., LT Group, Inc. and International Container Terminal Services, Inc.

Online brokerage firm also sees the index playing at 8,300, with possibilities of reaching resistance figures depending on the third- quarter results of big companies.

“Rallies towards 8,650-8,700 will be aided by large-caps’ spending drive for 2018 and outlook on earnings momentum,” said in its weekly outlook.

The firm also sees higher fund flow for given support for improved liquidity which can accelerate funding availability for long-term projects.

“Support for improved liquidity should encourage higher funds flow, especially after the local central bank excluded loans guaranteed by multilateral financial institutions from banks’ loans to subsidiaries/affiliates. This bodes well in hastening funding availability for projects with long-term gestation, post-July’s indication to gradually lowering reserve requirement.”

Developments this week expected to affect trading include the Reserve Bank of Australia and the European Central Bank’s policy meetings. The Bangko Sentral ng Pilipinas will also review policy settings on Thursday.

Meanwhile, a surge in shares of heavyweight Apple helped push up major Wall Street indexes on Friday, as investors also assessed a mixed US labor market report.

US job growth accelerated in October after hurricane-related disruptions in the prior month, the Labor Department said. But wages grew at their slowest annual pace in more than 1-1/2 years in a sign that inflation probably will continue to undershoot the Federal Reserve’s 2% target.

The Dow Jones Industrial Average rose 22.93 points or 0.10% to 23,539.19, the S&P 500 gained 7.99 points or 0.31% to 2,587.84 and the Nasdaq Composite added 49.49 points or 0.74% to 6,764.44.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. – P.P.C. Marcelo with Reuters