Index to retest resistance level

Improving macroeconomic fundamentals gave the index much needed upward momentum last week.

Thus, the benchmark Philippine Stock Exchange index (PSEi), whose immediate support is seen at 6,500 this year, will retest resistance at 6,700 to 6,800.

“The PSEi’s strong reaction after hitting 6,500, then retesting the 6,700 psychological resistance zone, shows technical promise. Follow-through momentum in improving macro-fundamentals can only help give the index much needed escape velocity to possibly revisit the pocket within the 6,700 to 7,000 last visited in the first quarter of last year,” said 2TradeAsia in a market commentary.

Last week, the PSEi jumped by 182 points or 2.81 percent week-on-week to 6,686, with all counters rallying, primed by financials, which rose by 5.20 percent and property, which went up by 2.89 percent.

The local bourse resumed its upward trend, banking on regional markets’ strength supported by China’s stimulus measures and higher-than-expected US GDP growth in fourth quarter 2023, which came in at an annualized rate of 3.3 percent.

Last week’s average market turnover was also up, showing an improvement of 11.64 percent week-on-week to P6.68 billion, data from the PSE showed.

Foreigners returned to the market as well, translating to a net foreign buying of P159 million on average from P99 million net selling the previous week.

Decliners, however, were still ahead against the gainers, 91 to 86.

Moving forward, the market will be influenced by the full year Philippine economic report for 2023 to be released later this week.

The economic team is targeting the growth rate to be at a range of six to seven percent.

Year-to-date GDP as of the nine-month 2023 period is at 5.5 percent, which implies a positive likelihood of reaching at least the lower end of the target range, according to 2TradeAsia, which estimates growth for the full year growth last year to reach 5.5 percent.

On the global front, market watchers will keep a close watch on the US Federal Reserve meeting on Jan. 31, which is expected to drive sentiment for the remainder of the quarter.