Philippine stocks are expected to trade sideways this week, after last week’s rally as investors will likely remain glued on developments on inflation and interest rate.
Philstocks Financial Inc. research head Japhet Tantiangco said macroeconomic concerns would still weigh on the market over the short term.
“Macroeconomic concerns are still expected to be present, primarily with respect to the Philippines’ inflation and interest rate outlook. These in turn are expected to weigh on the market,” Tantiangco said.
Tantiangco said investors are also expected to watch out for policy outlook clues from the Federal Reserve’s meeting next week following the latest macroeconomic data from the US where first-quarter gross domestic product grew below expectations, but first-quarter inflation picked up from the preceding quarter.
The onset of earnings could also provide positive catalysts that could bring back the bullish sentiment.
After three straight weeks of decline, the 30-company Philippine Stock Exchange index (PSEi) rebounded strongly, gaining 185 points, or 2.88 percent, week-on-week to close at 6,628.75.
All sectoral indices ended in the green led by mining and oil (+7.93 percent) and industrial (+6.07 percent)
Average turnover declined to P4.41 billion, down 56 percent week-on-week while net foreign selling accelerated.
“The PSEi’s sold bound at the 6,400 level is a relief sign in an otherwise lacklustre week,” online brokerage firm 2TradeAsia.com said.
“Expect tension between disheartened market that originally expected rate cuts by Q2 vs bargain hunters aiming for lower average cost plus higher dividend yield in the medium term,” it said.
The market’s support is at 6,400 this week, while major resistance is seen at 6,700.