Stocks are expected to trade sideways with an upward momentum this week on expectation that external headwinds such as higher inflation will ease in the coming months.
Analysts said the lower-than-expected 8.5 percent US inflation rate in July would boost investor sentiments over the near term. Online brokerage firm 2TradeAsia.com said profit taking could also take place this week as the market rallied last week.
“Eyes might be lock on whether gauges would barrel further up or sellers might soon appear to seize on this latest strength,” 2TradeAsia.com said.
Analysts said trading could turn volatile leading to the Bangko Sentral ng Pilipinas’ policy meeting before the end of August.
The Philippine Stock Exchange index, the 30-company benchmark, surged 4.6 percent last week to close at 6,699.66 on the back of renewed investor optimism. The all-share index also advanced 3.85 percent to settle at 3,464.16.
All sectoral indices ended in the green. Property jumped by 6.44 percent; holding firms, 5.47 percent; industrial, 2.59 percent; financials, 2.59 percent; and mining and oil, 2.22 percent.
Foreign investors were net sellers last week by P11.2 billion, from the previous week’s net buying of P1.4 billion.
Average daily turnover reached P9.7 billion, up from the previous week’s average of P7.2 billion.
Top gainers last week were ABS-CBN Corp. which jumped 30.6 percent to P13.32; Bloomberry Resorts Corp., which increased 12.6 percent to P6.98; and Manila Water Co. Inc., which climbed 12.3 percent to P16.62.
Heavy losers included Filinvest REIT Corp., which dropped 4.2 percent to P6.50; Converge Information and Communications Technology Solutions Inc., which declined 4.1 percent to P19.18; and Century Pacific Food Inc., which dipped 4 percent to P24.
Most stock markets rose Friday, riding the positive US inflation data as investors mull the size of the next interest rate move by the US Federal Reserve.
The Dow, S&P 500 and Nasdaq all piled on at least one percent, adding to the weekly gains for all three indices.
In Europe, London’s benchmark FTSE 100 index ended the day 0.5 percent higher, Frankfurt’s DAX gained 0.7 percent and Paris’s CAC 40 index added 0.1 percent.
“This week has been all about the inflation data and, frankly, it could be the dominant force in the markets now right up until the Jackson Hole symposium,” said OANDA analyst Craig Erlam, referring to an upcoming meeting of central bankers from around the world at the end of August.
“The fact that inflation not only decelerated in the US, but at a faster pace than the consensus forecasts was a double win and risk assets are feeling the benefit,” Erlam said.
But whether the improved data hearkens a pivot in Federal Reserve policy anytime soon remains an open question.
The markets have been concerned that, after two consecutive Fed increases in borrowing costs of three-quarters of a percentage point, further hikes of a similar magnitude could choke off economic recovery.
Fed officials have thus far lined up to try to defuse speculation that the cycle of monetary policy tightening could be coming to an end anytime soon. With AFP