Stocks seen to rise
THE LOCAL stock barometer is seen to gain ground this week as sluggish US jobs data boosted expectations that the US Federal Reserve’s interest rate liftoff may not happen at all this year.
Last week, the Philippine Stock Exchange index (PSEi) lost 66.94 points or nearly 1 percent to close at 6,850.61 on Friday. The index had declined for the second straight week. Trading was cautious ahead of Friday’s release of US payrolls data for September.
Joseph Roxas, president of local stockbrokerage Eagle Equities Inc., said the outlook this week should be “good” for local equities. “It looks like US interest rates won’t rise yet,” he said.
Roxas said the local stock barometer could climb back to 7,000 this week.
On Friday, it was reported that the US added 142,000 new jobs in September, less than the street forecast of 200,000. As such, the Dow Jones Industrial Index rallied by 200.36 points or 1.23 percent to 16,472.37 on Friday. With weak US payrolls data alongside continuing risks from China’s slowdown, many analysts have thus pushed back expectations of the US Fed rate increase from December 2015 to March 2016 at the earliest.
Despite the number of external headwinds, Roxas said it was likely that there would a Santa Claus rally in the local market this year.
Luis Gerardo Limlingan, managing director at Regina Capital, said the PSEi would need to rally above 6,900 this week following last week’s breaching of the 6,860 support. “Failure to recover would lead to deeper corrections back to weekly low (6,720), possibly extending to 6,600. This rally is also crucial because prices are slowly tracking 32-day moving average’s downward slope,” Limlingan said.
“We advise to stay light on positions or accumulate issues which are still holding above long-term moving averages,” he said. But until the PSEi breaches 7,020, Limlingan said the index might trade sideways this week. On the other hand, he said a breakout would extend rallies to 7,110-7,211.
Jonathan Ravelas, chief strategist at Banco de Oro Unibank, said the market could trade between 6,800 and 6,970 this week. The decline last week, he said, was on renewed concerns over China’s faltering economy. Doris Dumlao-Abadilla
