Local stocks are expected to sustain their sideways movement this week as investors remain cautious amid lingering risks.
BDO Securities said markets would likely keep an eye on the US Federal Reserve’s commentary this week for greater clarity around the interest rate path.
“Moreover, the release of Fed minutes and flash purchasing managers index might provide insights on whether inflationary pressures in the US have further eased,” it said.
While the Bangko Sentral ng Pilipinas last week hinted possible rate cuts by the second half of the year, analysts said investors remained cautious as inflation rate remained high.
“We retain the view that expectations must be tempered as ultimately inflation approaching 2 percent is what is going to dictate rate cycle changes,” online brokerage firm 2TradeAsia.com said.
“Disappointment from past deferral of rate hikes must also drive weaker rallies hinged on Q3 pivot,” it said.
The Philippine Stock Exchange index climbed 106 points, or 1.64 percent last week to close at 6,618, while the broader all-shares index jumped 1.35 percent to reach 3,524.
Average value turnover improved to P9.59 billion as foreigners turned into net buyers by P2.92 billion.
Philstocks Financial Inc. research head Japhet Tantiangco said that while the index climbed from recent lows, the market remained attractive for bargain hunting.
“The prospects of a possible rate cut by the BSP as early as August following their less hawking stance in their latest meeting may also give sentiment a boost. With this, the market could move up an upward bias,’ Tantiangco said.
The market’s support is seen at 6,400 this week, and resistance at 6,700.
