Continued rally to depend on new catalysts

WITH earnings season over, investors are expected to be looking for fresh catalysts that could drive the stock market higher.

“Our third-quarter corporate reports season has shown strong results with the PSEi (Philippine Stock Exchange index) members’ total net income registering a 44-percent year-on-year growth for the first nine months of 2022,” said Japhet Tantiangco, senior research analyst at Philstocks Financial Inc.

“This has helped the local market in staging a rally in the past weeks,” he added.

The benchmark PSEi returned to 6,400 territory on Tuesday last week, only dipping back to just under that level the following day before racking up two straight days of gains to close at 6,437.38 on Friday.

The wider All Shares also climbed, adding 8.03 points, or 0.24 percent, for a 3,396.63 close at week’s end.

Analysts pointed to strong earnings reports as a prime driver, with investors setting aside concerns over interest rate hikes. With year-end policy meetings looming, however, the issue is again expected to take center stage.

“Investors are now inclined to look for cues with respect to the monetary policy outlook of the Bangko Sentral ng Pilipinas (BSP) and the Federal Reserve,” Tantiangco said.

“Cues that would point to a slowdown in their monetary tightening may lift sentiment, while cues that would point to a continuation of their aggressive policy path may lead to otherwise,” he added.

Tantiangco believes the PSEi will continue to test the 6,400 resistance level. If it is able to establish a trend, the next hurdle will be 6,600.

Online brokerage 2TradeAsia also pointed to the impact of corporate earnings, noting that “companies under our coverage have performed above expectations, prompting readjustments of estimates.

“Topline growth for 2023 remains exciting despite uncertainties looming over the broader market,” it added.

“Interestingly, the PSE’s technical upward trend remains solidly intact, albeit with a stronger bias toward consolidation. As such, some momentum shifts over the coming sessions are expected.”

2TradeAsia sees the PSEi’s immediate support at 6,300 with resistance at 6,500-6,600.

A sustained breach above 6,400-6,500 could lead to the stock market testing the 6,600-6,800, said Michael chief economist at Ricafort Rizal Commercial Banking Corp.