Upbeat trading expected this week

Optimism highlighted last week’s session and may continue to do so this week after China and the US gave hints that they were open to coming to terms for a fair trade, F. Yap Securities said in a report over the weekend.

2TradeAsia, the online arm of F. Yap Securities Inc., said the resolution of the US-China trade war may encourage market investors to return to the market.

“Resolutions that would put clearer guidelines in resolving the US-China trade row will be a boost for equities, having regressed from its recent high this year. This issue is something that investors will have to deal with on a daily basis, pending clearer outcomes of talks,” it said.

The next move of the Bangko Sentral ng Pilipinas (BSP) would also provide guidance to investors.

“After moving within 53.32 to 53.55 against the dollar during the week, fund managers have yet to decipher the central bank’s move on interest rates, with its meeting still far off next month,” it said.

But for the reserve requirement, 2TradeAsia said another cut may be good.

“We think reserve requirement cuts might be a favored option, to ensure costs remain controlled and government project rollouts will go undeterred. Apart from healthy gross international reserves, proceeds from the recent and upcoming bond float would add to greenback supply,” 2TradeAsia said.

Inflation, which reached a five year high of 5.2 percent in June, would likewise help determine the future direction of the market.

But 2TradeAsia said the key for investors is to glide with the challenge of high inflation by taking on a phased approach as events unfold.

Factors that would help soften consumer prices in the third quarter include global crude prices which have started to ease to $70 per barrel from $74 per barrel previously.