Market to test 7,000-point mark this week – analysts

Shares prices are expected to test the crucial 7,000-point level over the near term period on expectations the government will impose more relaxed quarantine measures.

Analysts said the implementation of localized lockdowns is expected to help improve overall business activity, which in return could fuel the growth of the domestic economy.

The government last week said it was finalizing a new system of granular lockdowns, with Metro Manila serving as pilot experiment from September 16 to 30.

“The week’s close at 6,924.02 signals the market still has some gas to try the 6,900/7,000 levels in the near-term. Failure to test said levels could trigger some profit taking,” BDO Unibank Inc. chief investment strategist Jonathan Ravelas said.

Analysts said investors are also starting to ignore the spike in COVID-19 cases in the country and focusing on the long-term prospects of the economy.

Despite heavy foreign selling, the Philippine Stock Exchange Index eked out a 1.1-percent gain last week to close at 6,970.51, while the board All Shares Index rose 1 percent to 4,302.79.

Except for the financial index which dipped 0.2 percent, all sectoral indices posted week-on-week gains, led by mining and oil which jumped 3.4 percent, and services climbed by 2.9 percent.

Foreign investors were net sellers by P2.1 billion, while the average daily value traded declined to P5.1 billion from the previous week’s average of P9.2 billion.

Weekly top gainers were International Container Terminal Services Inc., which rose 7.2 percent to P190; Globe Telecom, which advanced 5.9 percent to P2,862; and Megaworld Corp., which advanced 5.6 percent to P3.

Weekly top losers were Global Estate Resorts Inc., which declined 13.5 percent to P1.15; ACE Enexor Inc., which decreased 4.9 percent to P15.10; and Holcim Philippines Inc., which dipped 3.8 percent to P6.54.

Meanwhile, US stocks dropped for the fourth straight day  on Friday and European stocks mostly fell amid renewed fears about inflation and ebbing growth. 

Investor sentiment took a hit from news the UK economic recovery slowed sharply in July, growing by just 0.1 percent as rising COVID cases and supply shortages offset the end of lockdown curbs.

In the United States, government data showed producer price inflation (PPI) over the latest 12 months hit a record 8.3 percent in August. That unnerved markets, and all three major Wall Street indexes closed lower for the week.

“This is part of a recent trend downward in the market, probably fueled by the Delta variant and the potential for slowing,” said Jack Ablin of Cresset Capital.

Ablin said the PPI spike “shows a fair amount of pricing pressure. And I think that caused some concern among investors,” as it could push the Federal Reserve to tighten monetary policy sooner.

US consumer price index (CPI) data is due out this week, and Michael Hewson, chief market analyst at CMC Markets UK said, “It would be rather odd if some of these price rises didn’t start to trickle down into the headline CPI rate.”  With AFP