Local share prices are expected to sustain their upward momentum this week after the government reported a slowdown in inflation rate.
Philstocks Financial Inc. research head Japhet Tantiangco said the latest inflation data, which eased to 3.7 percent in June from 3.9 percent in May, would support prospects of a possible rate cut by the Bangko Sentral ng Pilipinas.
This is a positive development for the market and could boost investor optimism, he said.
“The local market was able to close higher last week despite episodes of profit taking in the start and end of the week. We’re seeing a build up of upward momentum as the market was able to maintain its ground above 6,400 and at the same time break the 50-day exponential moving average,” Tantiangco said.
Trading remained thin last week, as many investors stayed on the sidelines, awaiting more clues on the movement of inflation and interest rates.
Meanwhile, investors will also watch out the US June inflation rate which could also provide hints on the US Federal Reserve’s policy direction.
“Investors are also expected to watch out for clues on our local economy through our upcoming labor market, foreign trade and foreign direct investments data,” Tantiangco said.
The market’s resistance is seen at 6,700 level this week, while support is at 6,400.
The bellwether Philippine Stock Exchange index closed at 6,492.75 last week, up 1.26 percent week-on-week.
Foreign investors were net buyers by P252.8 million, while average value turnover declined to P3.99 billion from previous average of P5.26 billion.
