Market support seen at 7,800 this week

The stock market is expected to continue trading sideways this week as investors set their sights on August inflation numbers.

F. Yap Securities said the hunt for a viable trading range is on, with immediate support seen at 7,800, and resistance at 7,950 to 8,000 in the next five trading days.

Market investors will be taking the cue from August inflation which is expected to climb up even higher than July’s 5.7 percent. August’s inflation rate will come out on Wednesday.

“Economic planners have already sent feelers ahead of August inflation’s release on September 5. So far, seven- month inflation has averaged 4.5 percent, and a figure of 5.9 percent would bring the eight-month average to 4.7 percent, above the high-end of 2018’s two to four percent target. To stay within the upper end of the range, inflation for September to December should be at 2.7 percent (even lower than January’s 3.4 percent). In case Sept-Dec. averages at 5.5 percent (tamer than August to September performance), that would bring the simulated full-year average to 4.96 percent,” F. Yap said.

“While heeding clues on how industry authorities will mitigate supply-side pressure (at least for key staple items), higher CPI would support expectations for another round of interest rate adjustment from the Bangko Sentral ng Pilipinas. Given this, consumer- or retail-tied shares might take the backseat for now, depending on spending trend for the remainder this year,” it added.

Last week saw the market swing between gains and losses, as sentiment took its cue from the latest US-Mexico accord that could pave the way for a renegotiated NAFTA deal.

Moving forward, analysts said participants’ attention would be swayed to prospects in store for the fourth quarter, specifically telco, infrastructure, energy, property and tourism and exploration.