Local stocks seen to move sideways this week

STOCKS MAY move sideways this week as investors keep a close eye on the French presidential elections and more first quarter earnings reports from local companies.

The Philippine Stock Exchange index (PSEi) surged 86.24 points or 1.11% to end last week at 7,841.99, its highest finish since settling at 7,845.49 on Aug. 26, 2016, as oil prices plunged and foreign funds returned to the local market.

The PSEi ended last week with a gain of 2.36%. Year-to-date, this pushed the main gauge’s return to 14.64%, while the wider allshares index climbed 37.30 points or 0.80% to 4,673.40. The bellwether closed the month of April at 7,661.01.

Justino B. Calaycay, Jr., head of marketing and research at A&A Securities, Inc., said markets will focus on the French presidential elections, oil price movements and corporate profit reports this week.

“The French head to the polling booths for the second time to elect either Marine Le Pen or Emmanuel Macron to succeed Francois Hollande as President. Polls point to a Macron victory which presents an EU- friendly France and douses cold water on ‘Frexit,’” Mr. Calaycay said.

The French election on Sunday is being keenly watched as it will determine whether Macron, a pro-European Union centrist, or Le Pen, a far-rightist known for her anti-EU stance, will lead the euro zone’s second largest economy.

“A Macron-finish could help boost sentiment, and further lessen forex volatility, as exit overhangs for the euro block is lifted. Meanwhile, the broad picture rests on fiscal spending drives, specifically on US tax cuts that will support increased consumer and investment spending,” online brokerage 2TradeAsia. com said in a market note.

Also, Mr. Calaycay noted that investors will also watch out for movements in oil prices after crude oil dropped below the $45-a-barrel mark. The West Texas Intermediate oil settled at $46.22 on Friday.

“Inventories are building up as US shale production rejuvenates tempering the impact of OPEC’s (Organization of the Petroleum Exporting Countries) production caps. This puts the spotlight on OPEC when it meets on May 25 of an ‘ordinary’ meeting in Vienna, Austria,” he added.

Luis A. Limlingan, managing director at the Regina Capital Development Corp. said there will also be some speculation ahead of the release of the country’s first quarter gross domestic product data on May 18.

On Friday, net foreign buying accelerated on Friday to P1.47 billion from P21.98 million in the previous session. Value turnover doubled to P14.58 billion, from P7.52 billion on Thursday, after 2.03 billion shares changed hands.

“As the PSEi approaches the crucial 8,000 mark, all eyes are on the continuity of the local bourse’s ascent and macro catalysts that will further propel gauges. It would be timely to consider increasing equities holdings to generate improved real returns. Seize on weakness to position & hold,” the online brokerage 2TradeAsia said.

Analysts placed immediate support for the bellwether PSEi at 7,750, while resistance was pegged at 7,900-7,950 level. —