Positive earnings reports likely to boost confidence

The local stock barometer is seen striving to stay afloat the 8,000 level this week, which will be shortened by an intra-week holiday to celebrate the new Lunar Year of the Pig.

Investors are seen to take cue from the forthcoming corporate earnings reporting season.  Average earnings this year are expected to improve from last year.

Last week, the Philippine Stock Exchange index breached the 8,100 mark for the first time this year.  The index added 90.96 points or 1.1 percent to close at 8,144.16 on Friday, gaining for the fifth straight week.

This was as global markets welcomed the US Federal Reserve’s signal that it would pause on its monetary tightening cycle.

The Fed’s stance, along with strong 2018 gross domestic product (GDP) numbers and expectations of a January inflation below 5-percent helped push the market past the 8,150 levels on Friday, BDO Unibank chief strategist Jonathan Ravelas said.

“The week’s close at 8,144.16 signals [that] the market still has the momentum to try the 8,300 levels, as the market printed a new year-to-date and intra-week high at 8,165.66,” Ravelas said.

However, Ravelas said that if the PSEi would fail to stay above the 8,000 levels, this could signal more profit-taking activities back to 7,500 to 7,800 levels.

This week, the stock market will have only four trading sessions as Feb. 5 is a nonworking holiday in celebration of the Lunar New Year turnover.

Christopher Mangun, head of research at Eagle Equities Inc., said that with only four days of trading this week, the market would likely see lower trading volumes.  With a holiday in the middle of week, he said some investors might take a break.

“The market may continue to trade sideways between 8,000 and 8,200.”