Stocks seen to trade higher this week

The local stock barometer is seen trading with an upside bias this week as last week’s listing of Eagle Cement and Cebu Landmasters has freed liquidity into the market alongside improved foreign appetite.

Last week, the Philippine Stock Exchange index (PSEi) rose by 0.51 percent, firming up for the second straight week, to close at 7,907.66 on Friday due to optimism over the Philippine tax reform program.

“The market briefly touched the 8,000 levels (the second time this year) despite the casino attack that killed 37 and martial law imposed by President Duterte in Mindanao last week,” said BDO Unibank Jonathan Ravelas.

“Chart-wise, the week’s close at 7,906.66 continued to suggest the market to range between 7,700-8,000 levels,” he said.

BDO expects the PSEi’s immediate support and resistance levels at 7,650 and 8,000 levels, respectively.

After the House of Representatives’ approval of the tax reform package, all eyes are now on the Senate.

Also, Ravelas noted that the year-to-date net foreign portfolio flows to the equity market had turned positive to $26.1 million from a net outflow of $348 million as of March.

One key data to watch this week will be the release of the Philippine inflation report tomorrow. Market consensus is an annual inflation rate of 3.3 percent for May.

Citigroup, for its part, is anticipating inflation to ease to 3.2 percent in May due to softer oil prices.

“Inflation cycle eased in May coincident with softer oil prices but the path to its third quarter 2017 peak remains intact,” Citi said.