Share prices are expected move sideways this week with an upward bias on the positive outlook on interest rates.
BDO Unibank Inc. chief investment strategist Jonathan Ravelas said the dovish commentary from the US Federal Reserve chairman Jerome Powell gave the local central bank more flexibility in lowering domestic rates.
Ravelas said investors were also positioning ahead of the second-quarter corporate earnings that could push the market upward.
First Metro Investments Corp., meanwhile, expects the Philippine Stock Exchange Index to hit 8,400 points to 8,600 points at the end of 2019 on the back of a 10-percent to 12-percent growth in corporate earnings amid the low inflation and interest rate environments.
FMIC’s stock picks for the period include BDO Unibank Inc. and Metropolitan Bank & Trust Co. for banks and Universal Robina Corp., San Miguel Food and Beverage Inc., and Wilcon Depot Inc. for the consumer sector.
It picked Ayala Land Inc., Megaworld Corp. and Robinsons Land Corp. in the property sector and favored Megawide Construction Corp. and Eagle Cement Corp. in infrastructure field.
On conglomerates, it favors Ayala Corp., JG Summit Holdings, Inc., Metro Pacific Investments Corp. and GT Capital Holdings Inc., and chose Aboitiz Power Corp. and Manila Electric Co. as the stock picks in the power sector.
The Philippine Stock Exchange Index last week gained 0.3 percent to 8,141.82, while the broader All Shares Index was flat at 4,944.70.
Four of the six major indices declined week-on-week, led by industrial (-1.6 percent), holding firms (-0.50 percent), services (-0.3 percent) and mining and oil (-0.03 percent). The financials rose 2.7percent week on week, while property added 1 percent.
Foreign investors were net buyers for the week by P601.2 million, while average daily value traded stood at P5.9 billion.
Weekly top price gainers were Puregold Price Club Inc., which rose 4.8 percent to P45.90; Security Bank, which climbed 4.1 percent to P179; and Robinsons Retail Holdings Inc., which gained 4 percent to P80.
Weekly top price losers were ISM Communications Corp., which slumped 14.6 percent to P5.80; Chelsea Logistics and Infrastructure Holdings Corp., which dropped 8.4 percent to P7.87; and Petron Corp., which fell 4.4 percent to P5.61.
Meanwhile, all three of Wall Street’s main indices popped to fresh records on Friday, ending the week on an emphatic note as investors grew increasingly confident the Federal Reserve will cut interest rates at the end of the month.
In congressional testimony this week, Federal Reserve Chairman Jerome Powell told lawmakers “crosscurrents” increased risks to the US economic outlook—strongly suggesting a rate cut was in the cards at the Fed’s next policy meeting in less than three weeks.
The broad-based S&P 500 closed above the 3,000-mark for the first time ever.
Jack Ablin of Cresset Wealth Advisors said investors also were encouraged by the outlook for what could be a better-than-expected corporate revenues.
However, with corporate earnings season set to begin in earnest, S&P 500 companies are forecast to see weaker profit growth compared to last year, according to FactSet. It would be the second consecutive quarter of slowing profit, something that has not happened in three years.
