Share prices at the Philippine Stock Exchange is expected to trade sideways this week with an upward momentum that could pave the way for a possible “Santa Claus rally” during the last trading month of the year.
“We’re still looking at a range between 7,350 and 7,480 for now. While the temporary breach last Friday gets us hopeful for an eventual breakout, a reversal isn’t certain yet until we close above said level,” Arbee Lu, head of marketing and business development of Papa Securities, said.
Online brokerage firm 2TradeAsia.com said the continued decline in world crude prices as well as the arrival of imported rice would support a tamer inflation rate for the month of November.
“If this trend is sustained, that would aid December’s seasonal consumer spending uptick, apart from influx of remittances,” 2TradeAsia.com said
It said the index must break past the 7,500-point level to support the market’s ascent to the 7,600 to 7,700 level.
“There may be pressure ahead as this zone is traversed, given supply overhang to those locked at 7,850. For now solid support seems in place at 7,300. Continue to trade within range and go selective shopping,” it added.
Justino Calaycay, research head from Philstocks Inc., said the Santa Claus rally was possible based on numbers.
A Santa Claus rally is a rise in stock prices in the month of December, usually during the last trading days of December and the first trading days of January.
The PSEi last week rose 0.4 percent week-on-week to 7,367.85 as funds started to position on oversold stocks during the four-day trading week.
The MSCI rebalancing, dovish comments from the US Federal Reserve chief and month-end window dressing boosted the stock market’s trading last week.
The PSEi year-to-date is still down more than 14 percent, while foreign investors were net sellers by more than P58 billion.
Wall Street, meanwhile, finished a banner week on a positive note on Friday, borne higher by optimism about US-China trade talks while Microsoft overtook Apple in market value.
After treading water much of the morning, US stocks pushed higher after US President Donald Trump spoke somewhat hopefully about talks scheduled for Saturday night with Chinese counterpart Xi Jinping on the sidelines of the Group of 20 summit in Buenos Aires.
“There’s some good signs. We’ll see what happens,” Trump said in Buenos Aires.
“If we could make a deal, that would be good. I think they want to and I think we’d like to.”
FTN Financial’s Chris Low was encouraged by the signing of a North American trade agreement earlier Friday by Trump, Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto but said analysts were skeptical of a breakthrough on China.
“It was reassuring to see the… signing of the (NAFTA) agreement and Trump hinting that some kind of deal was likely to be worked out with China, although all the commentaries I read say, ‘Don’t believe it,’” Low said. With AFP
