Stocks in search of positive catalysts

MANILA, Philippines — The local stock market could brace for another challenging week, with no positive catalysts in sight.

The benchmark Philippine Stock Exchange index closed in positive territory at 5,700.99 last Friday, up by 1.28 percent week-on-week, as bargain hunting lifted share prices.

This week, First Metro Investment Corp. head of research Cristina Ulang said profit taking may set in, followed by renewed bargain hunting, producing high market volatility given the peso weakness and uncertainty in the Bangko Sentral ng Pilipinas (BSP) and Federal Reserve hiking trajectory.

“Persistent inflation concerns, expectations of further monetary tightening and the peso’s record-low levels continued to weigh on investor sentiment,” Unicapital Securities head of research Wendy Estacio-Cruz said.

She said investors are looking ahead to August remittances on Oct. 15, followed by September balance of payments data on Oct. 19, for clues on household spending and foreign exchange flows ahead of the BSP’s Oct. 22 policy decision.

Philstocks Financial research manager Japhet Tantiangco also agreed that headwinds are still at play while positive catalysts are yet to be seen.

“While there are still a lot of bargain opportunities, given the present backdrop, the market is still bearishly biased,” he said.

Tantiangco said that chartwise, the market is still considered to be on a downtrend with a major support at 5,600 and a major resistance at 5,800.

He said the market is also challenged by its 10-day exponential moving average (EMA) which is currently acting as a dynamic resistance.

“If it breaks above its 10-day EMA, we may see a further recovery in the market. If it is unable to do so, the market is expected to test its 5,600 support. Breaching this line is expected to lead more bearish moves,” Tantiangco said.