PHILIPPINE share prices may continue to move sideways with a dismal US jobs report seen to test the resiliency of the local market.
“The local market has proven it is resilient, keeping on the green despite a drop in most of its global peers,” said Jun Calaycay of Accord Capital Equities Corp.
“This reflects the optimism on the prospects of the broad economy despite a less-than-forecasted 3.4 percent gross domestic product pace in the second quarter,” Calaycay added.
The main composite index is moving sideways, hovering around its medium term 50-day exponential moving average.
“The MACD still indicates more consolidation but it could be gearing up for the next run that everyone is waiting for,” said Bonner Dytoc, senior instructor at Absolute Traders and Consulting Services Inc. MACD refers to the moving average convergence-divergence, and is a technical indicator of the direction of the market.
On Friday, Wall Street plummeted after no jobs were added in the US last month, its worst employment data in 11 months, renewing fears that the world’s biggest economy may be headed for a recession.
The Dow Jones Industrial Average erased its gains for the week after losing 253 points or 2.2 percent to 11,240.26.
AB Capital Securities Inc. attributed the pullback on hiring as a response to the recent US credit rating downgrade and the plunge in stock prices.
“If the jobs data in the US fail to create any volatility, we could see the PSEi move within a narrow range of 4,300 to 4,400,” the brokerage said.
Local investors will closely watch out for the August inflation data that will be released on Tuesday. Expectations are it should remain within the government’s official target range.
“Benign changes in consumer prices will keep the BSP’ fingers off the interest hike button, the argument for which is further diminished by the GDP number. Implementing a hike at this time may be counterproductive,” said Calaycay.
If the Bangko Sentral ng Pilipinas decides to keep key interest rates steady, this will magnify the return potentials of equities, raising its attractiveness, particularly following a bloodbath early last month.
Mining stocks had been the object of profit taking in recent sessions—proof that funds may have shifted to the financial and property sectors, Dytoc said.
“Those may be the areas we should take a look at as they could be the next ones to push the index to higher levels,” he added.
