Stocks to consolidate ahead of Fed minutes, GDP

LOCAL SHARES are expected to continue moving sideways with an upward bias this week as investors monitor both local and global developments for possible catalysts.

After dropping on last Thursday due to slower than expected local economic growth data, the Philippine Stock Exchange index (PSEi) rebounded on Friday, gaining 9.93 points or 0.12% to close at 7,767.62.

Despite Friday’s slight recovery, however, the bellwether index was still in the red weekon-week from its 7,815.53 close last May 12.

The broader all-shares index was also down for the week after closing at 4,634.25 on Friday compared to the 4,648.26 recorded the preceding week.

“For [ this] week, the market will likely test immediate support at 7,700 and it’s possible that we might retest highs. Investors will be on the lookout for the release of the US GDP ( gross domestic product) data and the FOMC (Federal Open Market Committee) minutes to get a clearer view of where the market is headed,” Unicapital Securities, Inc. Head of Research Lexter L. Azurin said via phone.

“After the release of our own GDP numbers, and corporate earnings are almost done, [this] week, we’ll be dependent on the global and regional market for direction,” he added.

The Philippine Statistics Authority reported last Thursday that GDP growth eased to 6.4% in the first quarter, below the lower end of the government’s 6.5-7.5% target for the year and slower compared to the 6.6% posted in the preceding quarter and 6.9% in the same period last year.

US first-quarter GDP data is due out on May 26 and the US central bank will release the minutes of its latest FOMC meeting on May 24.

“We should see a rally with an upward [ bias] this week,” Summit Securities, Inc. President Harry G. Liu said. “I think the market [will move] sideways… Any new developments from the global situation and locally, any new investments or government polices that is positive will be positive for the market.” He pegged the PSEi’s range for the week at the 7,700 to 7,900 level.

Regina Capital Development Corp. President Marita A. Limlingan said the market will likely consolidate ahead of the major US reports due for release this week. “We think the will be in consolidation mode to down. Indeed [it] may reach 7,700,” she said via text message when asked for her market outlook.

US stocks rose but closed below their session highs last Friday on renewed concerns about Donald J. Trump’s presidency, after two new reports related to a federal investigation into possible coordination between Russia and Trump’s election campaign.

Investors have been closely following events in Washington as they worry whether Mr. Trump will be able to fulfill campaign promises for fiscal stimulus and tax reform. Many investors saw the policy promises as a key reason for the post-election rally.