Stocks seen consolidating after reaching 7,000 points

Share prices are expected to consolidate and build a base prior to a possible run-up after breaching the 7,000-point level last week.

With COVID-19 cases in the country under control and as the government continues with its aggressive vaccination program, analysts expect market sentiments to remain favorable.

The positive report on manufacturing data also indicates companies are resuming their expansion plans on expectations of the possible recovery in the domestic economy starting in the second half of the year.

“If government can meet its target of vaccinating up to 70 million people by the end of the year or even get close to said target, the stock market could return to pre-pandemic levels in the near term,” PSE president and chief executive Ramon S. Monzon said.

But analysts warned investors about being too overly optimistic about the market as the economy continues to be affected by the pandemic.

“After having trounced the the 7,000 mark, the PSEi needs to make a convincing base in the 7,000 to 7,200 level to (match) last wave’s peak of 7,330-7400. Note that doing so will put the index at its highest since the onset of the COVID-19 in early 2020—expectations should thus be tempered given the skepticism surrounding a ‘speedy recovery,” online brokerage firm 2TradeAsia.com said

The Philippine Stock Exchange Index last week rose back to 7,000, points, up0.7 percent week-on-week, after government data showed that manufacturing and unemployment data improved despite the pandemic.

The broader All Shares Index climbed 1.6 percent to 4,294.97.

Except for the property index, which declined 1.2 percent, all other sub-indices ended in the green led by mining and oil, which rose 5.5 percent; services, which advanced 2 percent; and industrial which gained 1.7 percent.

Foreign investors were net sellers for the week by P4.1 billion, while the average daily value traded increased to P7.26 billion from the previous week’s average of P6.05 billion.

Weekly top gainers were Rizal Commercial Banking Corp., which jumped 26.8 percent to P22.20; Semirara Mining and Power Corp., which increased 11.9 percent to P15.98; and Wilcon Depot Inc., which climbed 11.7 percent to P21.

Weekly top losers were Cirtek Holdings Philippines Corp., which fell 9.5 percent to P5.76; Cebu Landmasters Inc., which declined 9.3 percent to P3.70; and MacroASia Corp., which dropped 5.1 percent to P5.35.

Meanwhile, Wall Street stocks surged to fresh records Friday while the dollar retreated after a solid US jobs report that was not seen as accelerating a monetary policy shift.

After a muted session in Europe, the three major US indices notched all-time highs after the Labor Department reported the US economy added 850,000 jobs in June, better than expected and far stronger than in the prior two months.

Analysts, however, said the much-anticipated monthly data was not uniformly outstanding, noting that unemployment ticked up to 5.9 percent.

The market viewed the data as a “Goldilocks”-type outcome in reference to the fairy tale character, who famously preferred her porridge at the right temperature, not too hot or too cold.

Briefing.com analyst Patrick O’Hare characterized the data as “okay.”  With AFP