Market to remain in consolidation mode this week

The stock market is expected to trade sideways anew ahead of the upcoming US Federal Reserve policy meetings this week and the release of first half corporate earnings.

Last week, the benchmark Philippine Stock Exchange index (PSEi) gained by 68.13 points or 1.1 percent, a turnaround from the previous week’s drop of 166.56 points or 2.6 percent.

Since the start of this year, the PSEi’s decline was trimmed to 12.1 percent, from 7,122.63 at the end of 2021.

Unicapital Securities said the fiveweek long consolidation establishes a base of support ahead of market moving catalysts.

Immediate resistance is seen at the 6,300 to 6,500 levels while immediate support is seen at the 6,000 psychological mark, said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

He said the factors that affected last week’s market performance were the recent gains in the US stock markets to new highs in nearly 1.5 months.

This was after global crude oil prices eased to near three-month lows that could lead to further rollbacks in local fuel pump prices and help ease inflationary pressures.

In addition, Ricafort noted that interest rates eased as well with the benchmark 10-year US Treasury yield down to new three-week lows at 2.81 percent. This, in turn, could help ease borrowing costs and financing costs of some listed companies.

Moving forward, the major upcoming local leads and catalysts include the next Bangko Sentral ng Pilipinas (BSP’s) ratesetting meeting on Aug. 18, which may result in further hike in local policy rates.

Ricafort said stock market investors would be keeping a close watch as well on the first State of the Nation Address of President Marcos today, July 25.

Any indications on priority reforms and policies would influence the movement of the market in the coming days, he said.