The local stock barometer will try to break the 7,000 barrier anew this week, but various factors might temper any upside move.
The Philippine Stock Exchange index (PSEi) shed 0.4 percent last week as it closed Friday trading at 6,923.60.
BDO Unibank chief strategist Jonathan Ravelas said investors remained cautious on the heels of overseas developments, like the rising global commodity prices and the recent pronouncement of the US Federal Reserve that it could start tapering monetary stimulus within the year amid its recognition of higher inflation.
Locally, Ravelas said investors would await data on the inflation rate for September, scheduled for release tomorrow, Oct. 5. There have been renewed inflation concerns in the market after an inflation print of 4.9 percent was recorded in August, the highest so far this year, Ravelas said.
“The 7,000 levels remains elusive as it reflects a wall of worry,” Ravelas said, citing the prolonged pandemic, inflation woes and the US tapering just around the corner.
“The week’s close at 6,923.60 highlights continued consolidation within the 6,700 to 7,000 levels. Be on the lookout: should the 6,700 levels give way, the next key support is at 6,500 levels,” he said.
Bullish greenback
Meanwhile, the peso last week depreciated for the fourth straight week by 0.28 percent to P50.79:$1 as the greenback was boosted by indications that the US Fed could start tapering its bond purchases in November, Ravelas said.
“The week’s close at 50.790 signals the dollar bulls are well in control. Should this bullish dollar momentum persist, it could extend the rally and try the 51.50 levels in the near term. Otherwise, expect the currency to range within the 50.75 to 51 levels,” he said.
The weakening of the peso is often cited by stock traders as a disincentive to the market, as it reduces the value of peso-denominated assets while making the country pay more for imports, such as oil and capital goods.
Joseph Roxas, president of Eagle Equities, said the PSEi could trade within the 6,800 to 7,000 range this week. Should it break past 7,000, he said the next target would be 7,200.After multiple attempts to breach 7,000, Roxas said it was only a matter of time that this barrier would be conquered. “Where it is knocking is where it will enter,” he said. INQ