Market may climb this week

MANILA, Philippines — Uncertainties continue to hound the local equities market even as the government attempts to restart the economy with the easing of the two month Luzon-wide enhanced community quarantine. 

Immediate support for the Philippine Stock Exchange Composite Index (PSEi) is expected at 5,400 to 5,500 level, which will prevent further healthy downward correction, said Michael Ricafort, chief economist at Yuchengco-owned Rizal Commercial Banking Corp.

“The immediate resistance is at 5,650 to 5,700 levels as a gateway prior to further upside potential,” he said.

Last week, the stock market weakened for the second straight week, declining by 79.99 points or 1.4 percent to close at 5,541.95.

At this level the index has hit its lowest level in three weeks or since April 27. But this is still among two-month highs or since March 13. 

Ricafort said the index may be nearing its near term bottom.

“The PSEi has already undergone consolidation or base building above the 5,400 to 5,000 level for more than a month already or since April 6, thereby suggesting that indeed a near-term bottom has already been formed at the 4,000 to 4,500 level (the lows posted nearly two months ago), which happen to be the major support over the past 11 years as consistent with the view that the underlying upward correction over the past two months remains intact above the 4,500 to 4,700 levels,” he said.

The reopening of some malls and other business establishments would help gradually restart some business and economic activities amid social-distancing measures, Ricafort said.

However, he said investors would still be keeping a close watch on whether there would be new COVID-19 infections. 

The recent upward correction in global oil prices to new two-month highs amid some pickup in demand as more countries ease lockdowns and lead to greater demand for oil, the developments on US-China tensions if there would be escalation that could further slowdown the global economy, and recent signals from Fed officials about economic risks could also influence the direction of the stock market in the coming days, Ricafort said.