Investors to look to SONA, US data for catalysts

INVESTORS will look to President Rodrigo R. Duterte’s State of the Nation Address (SONA) today and corporate earnings results for possible catalysts to push the main index beyond the 8,000 line.

The Philippine Stock Exchange index ( PSEi) closed at 7,989.73 on Friday, up 1.08% or 85.39 points from the previous day.

Week-on week, the peso was higher by 103.83 points or 1.32% from its 7,885.90 finish last July 14, with property climbing 2.82% & mining & oil expanding 2.05%.

Total value turnover reached P7.2 billion, down 5% from the prior week, while net foreign inflow stood at an average of P114 million, a turnaround from the P173 million selling.

“All eyes will be on President Duterte’s State of the Nation Address on Monday, ahead of government’s economic blueprint aside from his administration’s timeline in lifting the Martial Law in Mindanao,” online brokerage 2TradeAsia. com said in its weekly market outlook report.

The brokerage said investors will be watching out for more details on the government’s Tax Reform for Acceleration & Inclusion program as well as its “Build, Build, Build” strategy.

“Bulk of the headlines would largely depend at home, given the country’s sound fundamental merits,” 2TradeAsia.com added.

It pegged the PSEi’s immediate support at 7,900 and resistance at 8,050-8,075.

“[ This] week, foreign funds will be watching,” said Regina Capital Development Managing Director Luis A. Limlingan in a mobile phone message.

He added that market players will also watch out for US data on new home sales, crude oil inventories, jobless claims, international trade in goods, durable goods orders and gross domestic product. The US Federal Reserve will also hold a policy meeting on July 25-26.

“With inflation gauge on tempered mode, the Fed is unlikely to raise rates any sooner than December, with most economic data supporting this view. The key variables to watch out for are faster-than-expected increases in employment & consumer spending which could alter such backdrop,” 2TradeAsia.com added.

The US Federal Reserve will announce plans to shrink its more than $ 4- trillion balance sheet in September, according to a Reuters poll of economists who also said the central bank will wait until the fourth quarter before raising rates again.

Results in the survey are in line with what Fed officials have hinted at in recent weeks, even as they are split on the outlook for inflation and how the lack of it might affect the future pace of interest rate hikes.

In a poll conducted just last month, predictions were for the Fed to raise rates by September.

But expectations have now been pushed back by a quarter, with the consensus from the latest poll of over 100 economists predicting the fed funds rate to climb to a range of 1.25-1.50% by the end of this year.

The Fed has raised rates twice so far this year.