Market may test 7,800 level this week

MANILA, Philippines — The stock market is struggling to stay above the 8,000 mark. 

The benchmark Philippine Stock Exchange index (PSEi), the stock market barometer, fell by 2.01 percent week on week to 7,908.89 as global economic growth concerns resurfaced and investors questioned the potential for progress on the US-China trade dispute. 

The upcoming changes in the Morgan Stanley Index re-balancing by the end of the month did not help any and is keeping investors sidelined, said Jonathan Ravelas, chief market strategist at BDO.

He said the week’s close at 7,908.89 highlights the market’s struggle to stay above the 8,000 levels. 

“With the week’s close below the 8,000 levels, expect a possible test toward the 7,800 to 7,850 levels,” Ravelas said.

2TradeAsia said net foreign buying aided local equities’ climb especially after the PSEi touched the 8,200 territory.

For this week, it said investors should be cautious. 

“Caution should seep in for now, with local elections coming in, especially for a market that’s in search for firmer direction on pending economic policies. Continue to trade a range. Immediate support is 7,700 to 7,800, resistance 8,000,” it said.

Moving forward, 2TradeAsia said market investors would be taking a close watch on global economic developments and the corporate results of listed companies.

The future strategies and funding requirements of listed companies should serve as a guide for investors, traders said.

“Fund managers are seen to assess variables that would support the global macro outlook this year, and how locally listed companies will position relative to their capex and operation-related strategies. This would likely keep gauges at bay for now, as investors retool their respective trading calls, and review these on a quarterly perspective. Sectors that have already lagged behind the overall market might be attention-catchers of liquidity, specifically those angling on improved prospects beyond 2019,” 2TradeAsia said.

It said market gauges are likely to form a new base as 2018 results are released, especially among large-cap stocks. 

Inflation, monetary actions and the US-China trade war will also be taken into consideration.

“Possibilities for monetary authorities to maintain their status quo on interest rates might gain support, pending the US Fed’s next card given the latest US retail spending data. Tamer inflation will be a booster on the near horizon, but risks of possibly spiking would depend on factors that could disrupt demand & supply, especially with no clear resolutions in sight yet on US and China trade tariff,” 2TradeAsia said.