SENTIMENT at the local market may still be dampened over last week’s report of a faster-than-expected inflation rate, but investors will be on the lookout for optimistic prospects here and abroad.
The bellwether Philippine Stock Exchange index dropped 3.3% week on week to finish at 7,598.64 on Friday. Net foreign selling stood around P895 million for the week.
All sectors closed in the red. Financials slumped hardest with a 5.2% weekly loss while property followed with a 4.9% decline. Both sectors expect the central bank to raise interest rates after August’s 6.4% inflation print exceeded government and market estimates.
Analysts expect last week’s disappointing factors to continue weighing on the market’s mood.
“Trading windows exist at 7,500-7,880, since the bourse took off from a base of about 6,929. Movements might be limited within this zone for now, until significant positive catalysts arise,” said in a statement.
“These may come from win-win arrangement on trade spats, approval of sequel on corporate income tax cut via TRABAHO. Choices meanwhile, might be limited on inflation hedge picks, defensives, and those with sequel stories to unlock for the remainder this year,” the online brokerage firm added.
TRABAHO or the Tax Reform for Attracting Better and High-quality Opportunities is a substitute bill to the second package of the government’s tax reform program.
Support hovers between 7,400 and 7,500 and resistance between 7,700 and 7,750, said.
Luis A. Limlingan, managing director at Regina Capital Development Corp., cited June’s foreign direct investments and July’s trade balance data — to be released today and Tuesday, respectively — as some of the local economic data “which may test either support or resistance this week.”
UPCC Securities Corp. Equity Trader Aristotle D. Reyes, Jr. said the action of government in response to the “looming overheating of the economy” will play a big role in reviving investor confidence.
“So the measures that the government will do will be crucial for the investors,” Mr. Reyes said in a phone message.
PNB Securities, Inc. President Manuel G. Lisbona noted, however, that Friday’s decline was “lesser in magnitude,” hinting that “at the very least, the market has finished digesting the inflation news and may consolidate in the absence of fresh leads.”
“If the market breaks below 7,500, the next support will be at 7,200,” Mr. Lisbona said in a mobile message yesterday.
Wall Street’s major indexes fell on Friday as U.S. President Donald Trump raised the possibility of additional tariffs on Chinese imports and Apple Inc indicated that some of its products could be subjected to such levies.
The Dow Jones Industrial Average fell 79.33 points or 0.31% to 25,916.54, the S&P 500 lost 6.37 points or 0.22% to 2,871.68 and the Nasdaq Composite dropped 20.19 points or 0.25% to 7,902.54. — JCL