The local stock market is seen trading with an upward bias this week but nevertheless vulnerable to offshore developments as investors await crucial developments in the eurozone, the major cause of stress in global financial markets.
The main-share Philippine Stock Exchange index last week rose by a marginal 0.69 percent to finish at 4,290.92. The local market was soured last week by the disappointing third-quarter Philippine economic output but later in the week, it stabilized on the back of coordinated action by major central banks to keep global liquidity flowing.
“The market is still in a bullish mode as it has persistently stayed within its long-term uptrend channel. Although it seems to be struggling to stay above the lower band of the channel, it is also challenging its major resistance at 4,400,” said AB Capital Securities in its weekly commentary.
The convergence between the upward trending support line and the horizontal resistance is indicating a possible consolidation in the near term. While bias is positive technically as the converging lines are forming a bullish ascending triangle, the local brokerage noted that the fate of the market would not be in the hands of the chartists but in the hands of the top economic managers of the world.
AB Capital Securities said that for this week, the market would be discounting the important US jobs data that came out Friday.
Based on the latest report, the US unemployment rate fell by 0.4 percentage point to 8.6 percent in November while non-farm payroll employment rose 120,000. New jobs were created in the retail trade, leisure and hospitality, professional and business services and health care segments.
“Investors should also be watching the developments in Europe as it will be a very busy week in the eurozone. European leaders will need to come up with a firmer solution to the sovereign debt crisis,” AB Capital Securities said.
The brokerage sees the main Philippine Stock Exchange index trading between 4,200 and 4,400.
Jonathan Ravelas, chief strategist at Banco de Oro Unibank, said the local index would likely range in the 4,250-4,350 levels in the week ahead.—Doris C. Dumlao