The local stock barometer is attempting to stay above 7,200 this week on improved risk-taking in overseas markets alongside potential positioning ahead of the third-quarter earnings reporting season.
Last week, the Philippine Stock Exchange index (PSEi) declined by 0.2 percent week-on-week to close at 7,247.03.
“The PSEi may get a boost both from the rally in European stocks after the biggest selloff in 15 months to kickstart the month and as latest US jobless rate, which finally broke through 6 percent after nearly six years. This could serve as a much needed diversion from from the pro-demonstration rally in Hong Kong. In addition funds may start repositioning their portfolio in anticipation of third quarter results,” said Luis Gerardo Limlingan, head of research at local stockbrokerage Regina Capital Development Corp.
On Friday, the Dow Jones industrial index rebounded by 208.64 points to return to the 17,000 mark on better-than-expected US payrolls data. It was reported that the US
jobless rate declined to a six-year low of 5.9 percent.
At the local market, Limlingan said that with 7,200 support holding for the week, expect a sideways to uptrend trek that could bring the index to retest 7,300-7,400 levels. “Bearish divergences last week also eased a bit so we don’t expect strong movements below 7,200. Still, the strategy is to accumulate as long as support holds,” he said.
In a research note issued by AB Capital Securities, analysts Joyce Anne Ramos and Alexander Adrian Tiu said the market had surprised analysts and investors last week after the PSEi bounced back from the selloff on Thursday after breaching below the identified main support at 7,200.
They said this week would be a critical point, wherein a failure to breach the 7,260 resistance level could be seen as a signal that the index may now be entering into a medium-term correction phase with downside targets at 7,000 and 7,050.
Immediate support and resistance levels are seen at 7,200 and 7,260, respectively. Doris C. Dumlao