Index seen consolidating this week

MANILA, Philippines — The stock market is expected to consolidate within the 7,700 to 8,000 level this week, analysts said. 

“The week’s close at 7,798.28 highlights consolidation within the 7,700 to 8,000 level. Be mindful that a test of the 7,500 support level is still probable in the near-term. Only a break above 8,000 will call the bulls back to play,” said Jonathan Ravelas, chief market strategist at BDO.

Last week, the market barometer Philippine Stock Exchange index (PSEi) was almost unchanged at 7,798.28 on lack of fresh incentives to trade. 

Moving forward, Ravelas said investors would await the outcome of the first monetary board meeting of BSP Governor Benjamin Diokno who has previously hinted at a monetary rate cut. 

2TradeAsia said the market was saved by late week buying. 

There was lack of market catalysts, it said.

“Apart from lack of digestable headlines from the US-China trade talks, Britain Prime Minister Theresa May failed to obtain parliamentary clearance for a Brexit deal that was supposed to be implemented on March 29,” it said.

Thus, the PSEi settled a notch higher at 7,798. 

Moving forward, it said funds flow in favor of the foreign exchange and fixed income markets may slow for now until the macro picture clears. This would bode well for global equities in general as tame borrowing costs are upheld. 

Overall, trading range zones should still be supported in local equities trading as risks are still present with a stalled fiscal budget approval for the year.

Efforts must also be made in addressing the water shortage dilemma on top of countering efforts to mitigate El Niño’s impact on agriculture. 

2TradeAsia said that immediate support may settle is seen at 7,600 to 7,700 with resistance at 7,850 to 7,950. 

Piper Chaucer Tan of Philstocks Financials said the index may see some slight upward strength, testing the 8,000 due to the upcoming BSP meeting which is having a dovish sentiment toward its monetary policy stance. “We think investors will buy in to this narrative. US markets were also up on the positive developments on trade negotiations shrugging off the cuts in economic growth forecasts,” Tan said.