Investors are hoping to find relief this week from the recent bloodbath seen in the stock market. Last week, the Philippine Stock Exchange index fell by 6.15 percent to close at 6,612.62, declining for the third week in a row.
Manny Cruz, chief strategist at Papa Securities, said local stocks might rebound this week on bargain-hunting after the freefall in the last few weeks.
“Focus of interest this week will be on the January inflation that BSP (Bangko Sentral ng Pilipinas) projected to rise to 3.7 percent … fourth quarter 2020 corporate earnings results and the renewed volatility in Wall Street,” he said.
Cruz sees a strong index support at 6,450 and resistance at the 7,000-7100 area.
“Investor sentiment remains cautious as elevated valuations, signs of a tepid recovery are feeding bearish sentiment that could worsen if earnings disappoint and the government fails to contain the outbreak,” said Jonathan Ravelas, chief strategist at BDO Unibank.
The fourth quarter 2020 gross domestic product (GDP) had contracted by 8.3 percent year-on-year, smaller than the 11.4 -percent contraction in the third quarter. This brought full-year 2020 GDP contraction to 9.5 percent, which was in line with market consensus.
“The week’s close at 6,612.62 signals further tests toward the 6,500 levels in the near-term. Watch this space,” Ravelas said.
He also expects local interest rates to move sideways to down in the near term. —Doris Dumlao-Abadilla INQ