Stocks may drop further amid lack of catalysts

By Arra B. Francia, Senior Reporter

LOCAL SHARES may slump in the remainder of the week on the lack of positive leads.

The 30-member Philippine Stock Exchange index (PSEi) fell 1.72% or 139.51 points to 7,945.37 on Tuesday, snapping a five-day winning streak that saw it climb past the 8,000 level.

Market breadth on Tuesday was also negative, with 113 decliners versus 84 advancers and 40 names that stayed flat. Foreign investors also went back on selling mode at P737.38 million, compared to net inflows of P1.43 billion in the previous session.

“Our PSEi may retest 7,800 if we see no positive catalyst in the remaining two trading days of the week. Current resistance is at 8,100,” Timson Securities, Inc. Equity Trader Jervin S. de Celis said in a mobile phone message.

Mr. De Celis noted that there will be little impact from the inflation data reported on Wednesday. The Philippine Statistics Authority (PSA) reported on Wednesday that inflation accelerated to 3.2% in May, higher than April’s 3% but lower than the 4.6% seen in May 2018.

The PSA attributed the increase to higher prices for food, such as vegetables, fruit, and fish. Housing and utility expenses such as water, electricity, and fuel also rose last month.

The headline inflation print is higher than the 3% median estimate recorded in a BusinessWorld poll of 11 economists, but was still within the 2.8-3.6% estimate range given by the Bangko Sentral ng Pilipinas’ Department of Economic Research last week.

“I think it (inflation) is of little concern for investors since it accelerated by only 0.2% versus April’s inflation data. So I don’t think it will have a dragging effect on the PSEi [on Thursday],” Mr. De Celis said.

Eagle Equities, Inc. Research Head Christopher John Mangun earlier said that even if inflation comes in higher than 3%, this would still be within the government’s target of 2-4%.

On the other hand, the PSEi may also take cues from international markets’ performance yesterday.

Wall Street indices all gained more than 2% after US Federal Reserve Chairman Jerome Powell hinted that they could cut interest rates if the US’ trade war with China and its recent dispute in Mexico cause a slowdown in the country’s economy.

With this, the Dow Jones Industrial Average jumped 2.06% or 25,332.18. The S&P 500 index climbed 2.14% or 58.82 points to 2,803.27, while the Nasdaq Composite index soared 2.65% or 194.10 points to 7,527.12.

Asian markets followed suit, with Japan’s Nikkei 225 up 1.77% or 361.39 points to 20,769.93. The Hang Seng index added 0.55% or 147.68 points to 26,909.20, while the Shanghai Composite firmed up 0.57% or 16.28 points to 2,878.56.

Local financial markets were closed on Wednesday in celebration of Eid al-Fitr.