Stocks may rebound on second-quarter results
SHARES may move up on the first trading week of the month, as investors look toward the June inflation figure alongside corporate earnings reports for the second quarter.
The bellwether Philippine Stock Exchange index ( PSEi) firmed up 1.79% or 127.11 points to 7,193.68 on Friday, showing a 1.85% increase on a weekly basis. The property and industrial sectors led the week’s growth at 3% and 1.7%, respectively.
Net foreign selling eased to P80 million last week, significantly lower than the P1.32 billion recorded the week before.
Analysts expect the market to start moving out of its negative spell at the start of this quarter.
Eagle Equities, Inc. Research Head Christopher John Mangun said since the start of the PSEi’s bull run in 2009, the longest that the index closed with a loss is five months in a row, last seen in the second half of 2016.
“If history repeats itself, then we may see the index end July in the green. There are several potential catalysts that may help push the market higher this month as we are expecting the second-quarter numbers to come in and the president’s state of the nation address which has been known to uplift investor’s spirits,” Mr. Mangun said in a weekly market note.
Local leads to watch out for this week include inflation data for the month of June set to be released on Thursday.
The Bangko Sentral ng Pilipinas’ Department of Economic Research said inflation likely printed between 4.3%-5.1% last month, versus its projection of 4.6-5.4% last May. Data from the Philippine Statistics Authority reported that May inflation was 4.6%, the fastest pace in at least five years.
“In case consumer prices trend lower versus May, there would be less pressure for the central bank to raise interest rates over the near-term & would likely support buying appetite for stocks. If inflation goes up however, calls for rate adjustments might be in place, as markets give higher regard to the US FOMC ( Federal Open Market Committee)’s sequel action on the Fed rate,” online brokerage 2TradeAsia.com said in a weekly market note.
Meanwhile, investors should also position themselves in anticipation of the second-quarter earnings of listed firms, which would determine whether they are on track to hit growth prospects for the remainder of the year.
“Greater emphasis may be on sectors that will directly participate in government’s infra push, as investors validate the timing of capex deployment,” 2TradeAsia.com said.
Eagle Equities’ Mr. Mangun placed this week’s support at 7,000 to as low as 6,800, with resistance from 7,200 to 7,400.
“We are starting the month with a lot of optimism as there is strong indication that we will see a bottom soon and come to the end of this correction that we are currently experiencing,” Mr. Mangun said.