Tight trading range seen this week
Local stocks are still seen to test recent highs this week but trade with increasing caution as investors reassess gains in the last few days.
The main-share Philippine Stock Exchange index closed 2.5-percent higher at 4,483.36 last Friday although profit-taking started to intensify in the latter part of the week.
Joseph Roxas, president of Eagle Equities Inc., said the local market still had some gas to climb this week as US markets seemed on an upswing. Wall Street recently benefited from a string of favorable US economic news.
Roxas noted that the Dow Jones industrial index was only modestly down Friday (down by 55.7 points) after a strong performance for the week (up 1.2 percent). An upbeat US jobs reports on Friday added to the string of economic news suggesting a US recovery as nonfarm payrolls improved in December while the jobless rate fell to a near three-year low of 8.5 percent.
Banco de Oro Unibank chief strategist Jonathan Ravelas said last week’s close suggested a near-term top at the week’s high of 4,527.21.
“The market’s inability to stay above the 4,500 levels casts a shadow of doubt to this rally. Look for a retest of the 4,500- 4,525 levels in the week ahead,” Ravelas said. “However, a break below the 4,370 level will signal a correction is at play and could see further weakness toward the 4,150-4,200 levels.”
AB Capital Securities analyst Gregg Adrian Ilag said there would be a few developments due this week which could influence investor sentiment.
He cited China’s release of core consumer price index, which will influence the next interest rate decision likely leading to a monetary tightening.
There is also a statement from the European Central Bank (ECB) from which investors would look for a “dovish” tone to accommodate the sluggish European economy and a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel to discuss healthier solutions for the European economy.
As such, Ilag said the main index would likely trade tightly this week, with the next resistance at 4,545 and support at 4,377.—Doris C. Dumlao
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.