Investors are mostly seen staying on the sidelines this shortened trading week as they pause for a midweek holiday break and await key local third quarter earnings reports.
Last week, the main-share Philippine Stock Exchange index (PSEi) shed a total of 125 points or 1.5 percent to close on Friday at 8,295.95.
The markets will be closed on Tuesday and Wednesday this week for All Saint’s Day holiday.
Jonathan Ravelas, chief strategist at BDO Unibank, said investors had capitalized on their gains after the index printed a new high at 8,586.73 on Oct 20.
Bargain hunting toward the end of last week, however, pushed the index off the week’s low as investors took advantage of low prices to take position ahead of the third quarter corporate earnings results, Ravelas said.
“Chartwise, the week’s close at 8,295.95 highlights some support emerged at the 8,150-8,200 support range,” Ravelas said.
“Continue to see the market to range between the 8,150 to 8,500 levels in the week ahead,” he added.
Immediate support and resistance levels are seen at 8,150 and 8,500 levels, respectively.
In the meantime, Ravelas noted that the local currency weakened by 0.6 percent week-on-week for the fifth straight week to 51.76:$1. The greenback strengthened anew against major and emerging market currencies on speculation that US President Trump’s pick for the next US Federal Reserve chair could either be former investment banker Jerome Powell or Stanford University economist John Taylor. As both candidates are seen to be more hawkish than current Fed Chair Janet Yellen, Ravelas noted that 10-year US treasury yields rose, making the greenback more attractive.
As such, the peso hit a new 11-year low at 51.85 against the US dollar last week.
“Chartwise, the week’s close at 51.76 clearly manifests that the dollar bulls are at play. Focus in the near-term is a test of the 52 to 52.50 levels,” Ravelas said.
Ravelas expects the local currency to range within the 51.60-51.90 levels this week.