Stocks are expected to move sideways this week, following a strong rally last week led by positive economic data and Japan’s stimulus program.
RCBC Securities said the market’s movement this week would be crucial after last week’s exceptional ride, as a breakout would be seen as a strong buy signal, while any sharp decline would retest the the market’s recent low.
Investor sentiment turned positive last week, after three weeks of pessimism brought about by falling oil prices and China’s economic slowdown.
“A rebound in oil prices, the US Fed’s decision to keep interest rates unchanged and the Bank of Japan’s unexpected interest rate cut to below zero all helped boost sentiment towards global equities in general. At home, investors were further emboldened by strong fourth-quarter GDP of 6.3 percent,” RCBC Securities said.
F. Yap Securities investment analyst Jason Escartin said prospects this week would be data-dependent, which could add more gyration on funds flow movement.
Escartin said investors should also exercise caution on intra-week spikes, ahead of China’s Lunar New Year holiday.
“Support at 6,600 will be tested, while a retracement towards 6,550 is not ruled out,” Escartin said.
The Philippine Stock Exchange index, the 30-company benchmark, surged 7.7 percent last week to close at 6,687.62 on Friday, while the broader all- share index climbed 6.6 percent to 3,812.87, as investors welcomed the fourth-quarter growth of 6.3 percent.
The market’s rally was also fueled by investors’ optimism, after the Bank of Japan surprised investors across the region with a negative interest rate policy.
Despite the late rally, the PSEi was still down 3.8 percent since the start of the year, due to massive selloff at the start of the month.
All major subindices ended in the green, led by holding firms (9.8 percent), property (8.9 percent), services (8.6 percent), mining and oil (4 percent), financials (3.5 percent) and industrial (3.3 percent).
Foreign investors were net buyers by P2.58 billion last week, as total overseas buying reached P20.3 billion while overseas selling amounted to P17.75 billion.
Foreign investors were still net sellers by P2.1 billion in January.