WEEKLY SHARES OUTLOOK

Catalysts needed to spark rebound

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INVESTORS will keep a wait-and-see stance and hope for a catalyst to spur the market out of its current tight consolidation range as prospects of higher Federal fund rates lure foreign money back into dollar-backed assets.

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“As you can see, the market is just really [on a]wait-and-see mode. Your biggest most crucial catalyst here is the comprehensive tax reform package. The problem with that is it looks like it got delayed—it’s not going to get passed in July,” Miguel Agarao, Wealth Securities Inc. analyst, said in a phone interview.

“You can expect it to continue—the consolidation you’ve been seeing since the middle of January where we’re just moving between 7,000 to 7,400, although I think now is a bit narrower—maybe 7,200 to 7,400. So, I think you’re just going to consolidate within that range,” he said.

Luis Limlingan, business development head at Regina Capital Corp. shares the same view, saying the market “is still poised to trade sideways as investors are in search for any catalyst to propel the market higher.”

The market is concerned about how the US Federal Reserve will counter the hurdle of the Trump administration’s plan to implement a tax reform overhaul, 2TradeAsia.com said in a note.

“Minutes on the Fed meeting will be on the spotlight this week, specifically on insights how the Fed will move forward while retaining on jobs data results, inflation and trade effects from Brexit,” 2TradeAsia.com said.

“On the other hand, the selection process of the next BSP chief has begun, with Deputy Governors Diwa Guinigundo and Nestor Espenilla Jr. among the frontrunners alongside Antonio Moncupa Jr. and Peter Favila. A smooth transition could help the next governor gauge the right metrics in assessing inflation and guidance for future rate directions,” it added.

Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. is set to retire early next July, after serving two consecutive six-year terms.

The bellwether PSEi may continue to test the 7,400 resistance level and fall back to the established support 7,250 if it fails to breach 7,400, according to 2TradeAsia.

The market needs to break away from its sideways trend, and might gain traction as economic stimulus measures are announced. Seize the dips to position and go for selective issues, it said.

On Friday, the PSEi shed 20.87 points or 0.29 percent to close at 7,311.72 while the broader All Shares fell by 11.94 points or 0.27 percent to close at 4,399.71. Week-on-week, it gained by 0.58 percent.

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