Earnings, US-China trade talks in focus this week

By Arra B. Francia, Reporter
LOCAL STOCKS are seen to firm up this week as more companies disclose their earnings results for 2018, while investors also monitor how trade negotiations between the United States and China will pan out.
The benchmark Philippine Stock Exchange index (PSEi) climbed 0.38% or 30.83 points to finish at 7,962.13 last Friday. It closed the week 0.67% higher or 53.24 points.
“As more earnings reports come in [this] week, this may provide the catalyst that the market needs,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.
Companies that will be releasing their earnings reports include BDO Unibank, Inc., Manila Water Company, Inc., Manila Electric Co., and SM Investments Corp. These firms account for 8.85% of the PSEi basket.
“We are still positive that the market will perform better and end the week with gains as economic fundamentals are intact, the continuous inflow of foreign funds and the strengthening of the currency,” Mr. Mangun explained.
The Eagle Equities analyst added that investors may prop up the market considering that it is the last trading week of February.
“[I]nvestors may want to end the month in the green. The main index is currently down 0.56 percent for the month which is not much and a strong move to the upside [this] week will cause it to end the month in the green,” Mr. Mangun said.
Overseas, market leads include news on how the US-China deal is progressing ahead of their truce’s deadline on Friday, March 1.
“Regardless, fund managers may need to assess if both would agree to zero, status quo, or higher tariff, specifically on its impact on key production input items. The odds that may support for increase in tariff appear likely, possibly at a rate lower than anticipated,” online brokerage 2TradeAsia.com said in a weekly market note.
US President Donald J. Trump tweeted on Monday morning that he will delay the scheduled increase in tariffs against billions of dollars of Chinese goods on Saturday, noting that the US has made “substantial progress.”
Mr. Trump also said they are planning a summit with Chinese President Xi Jinping at Mar-a-Lago in Palm Beach, Florida to conclude an agreement, if both sides continue to make additional progress.
“Once the dust clears, however, higher tariffs may still weigh on consumption and investment demand growth. Given this, views for slower US economic expansion would be supported, and prod players to revert their attention to the Fed,” 2TradeAsia.com explained.
Eagle Equities’ Mr. Mangun placed the PSEi’s support level from 7,900 to 8,000, with resistance from 8,100 to 8,300.
Financial markets were closed yesterday for the EDSA People Power Revolution anniversary.